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Standard Bank Group Ltd.
(Standard Bank of South Africa)
In 1862, Briton John Paterson founded
the Standard Bank of British South Africa. Backed by British capital, the
bank's original head office was in London, but with a colonial headquarters in
Port Elizabeth in Cape Colony. In 1866, the very first diamond in South
Africa was discovered along the banks of Orange River, around the borders of
the Cape Colony, the Transvaal and the Orange Free State. Three years
later, another diamond was discovered and the diamond rush soon began. Standard Bank in 1870 opened a branch in Klipdrift in the heart of the
diamond fields. The bank would make advances against the
estimated values of the diamonds, then forward the diamonds to London for sale on behalf of the diggers.
Standard Bank became prominent in financing the diamond mines of
Kimberley in the 1870s.
At the same time, gold was also
discovered in the Transvaal (officially Zuid-Afrikaansche Republiek), which at
the time was an independent country. Because Standard Bank of British
South Africa's memorandum of association limited its sphere of operations to
only areas under British jurisdiction, the bank initially was not able to enter
the Transvaal market. However, in 1877, Britain annexed the Transvaal and
Standard Bank promptly opened branches around the gold mines. The
annexation, however, eventually led to the bloody First Boer War between the
Boers (Dutch settlers of the Transvaal, who were against British rule) and
Britain itself in 1880. The British forces were soundly defeated in 1881 and
the Transvaal regained its independence. Standard Bank of British South
Africa once again faced the same dilemma in the Transvaal: either withdraw from
the Transvaal or alter its memorandum of association to allow itself to operate
in jurisdictions not under British control. The bank opted for the latter
in order to stay in the Transvaal in 1881. Two years later in 1883, the
bank dropped 'British' from its name and became known as the Standard Bank of
South Africa.
Standard Bank's decision to remain in
the Transvaal proved very fortunate, for in 1886 major gold deposits were
discovered. Standard Bank promptly opened a branch under a tent in the
mining camp, which would evolve into today's Johannesburg. Standard Bank
is said to have handled half the output of the second largest gold field in the
world on its way to London.
More discoveries of diamond and
precious metals mines in the region reignited British imperial greed and the
Second Boer War was fought between Britain, the Transvaal and the Orange Free State between 1899 and 1902. This time, the Boers lost and Britain annexed
both republics, which in 1910 were amalgamated into the Union of South Africa
along with Cape Colony and Natal Colony.
Throughout the 1890s and 1900s,
Standard Bank opened its first offices outside of South Africa: Southern
Rhodesia (now Zimbabwe, 1892); Northern
Rhodesia (now, Zambia, 1893); Portuguese
East Africa (now Mozambique, 1894); Bechuanaland (now Botswana, 1897);
Basutoland (now Lesotho, 1901); Basutoland (now Lesotho, 1901), Nyasaland (now Malawi, 1901), British East
Africa (now Kenya, 1911); Belgian Congo (now Democratic Republic of Congo, 1911)
Zanzibar (1911); Uganda (1912); South West Africa (now Namibia, 1915) and Tanganyika
(now Tanzania, 1916).
Then in 1920, Standard Bank of South
Africa acquired full control of the African Banking Corporation, which was a
fellow British colonial bank with operations in Southern and West Africa.
South Africa left the British Commonwealth
and became a republic in 1961. The next
year, a restructuring led to the establishment of a British-based holding
company called Standard Bank Ltd., over which subsidiary Standard Bank of South
Africa carried on business in South Africa and South West Africa (today’s
Namibia). In 1965, Standard Bank bought the Bank of West Africa, expanding in
Nigeria, Ghana, Sierra Leone and Gambia.
As size became increasingly important to manage the risk of ever-expanding loan
portfolios, Standard Bank Ltd. decided to merge with the Chartered Bank in 1969
to create the Standard and Chartered Banking Group, combining their African and
Asian networks into a major international bank. As part of the merger, a new
holding company for the South African operations called Standard Bank
Investment Corporation (‘Stanbic,’ now Standard Bank Group Ltd.) was created.
Then in 1970, Standard and Chartered floated part of Standard Bank Investment
Corp. on the Johannesburg Stock Exchange. In 1975, Standard and Chartered
Banking Group shortened its name to Standard Chartered Bank.
Throughout the 1980s, South Africa’s white minority establishment and its
discriminatory policies against the black majority population came under
increasing criticism and scrutiny. Great Britain, South Africa’s largest
foreign investor and trading partner, faced mounting pressure to join the
anti-Apartheid boycott and to sever economic and political ties with the
white-controlled South African government. After years of controversies, Standard
Chartered Bank in 1987 finally divested its remaining 39% stake in Standard
Bank Investment Corp. for USD $254-million to local South African institutions
and the public. Standard Chartered Bank had the dubious reputation as the last
foreign bank to leave South Africa. The sale was the largest divestment ever in
South Africa by a foreign company at the time.
Having lost its connection to former parent Standard Chartered’s African
operations outside of South Africa, Standard Bank began to rebuild its own
African network, opening a branch in Swaziland in 1988. During the 1990s,
Standard Bank either acquired or opened new subsidiaries in Botswana, Lesotho,
Tanzania, Swaziland and Uganda. In 1993, the bank acquired the ANZ Grindlays
Bank’s operations in Botswana, Kenya, Uganda, Zaire, Zambia and Zimbabwe, and
minority holdings in banks in Ghana and Nigeria from the Australia & New
Zealand Banking Group (ANZ).
To avoid confusion with its former parent and now
competitor, Standard Bank adopted the name 'Stanbic Bank' in those African
countries (outside of South Africa) where Standard Chartered Bank also
operated.
Recent transaction(s):
- In 1992, Standard Bank set up a British subsidiary called Standard Bank London.
- In 2001, Standard Bank bought Jardine Fleming Bank Ltd. in Hong Kong. Standard Bank planned to use this Hong Kong platform to expand its Asian and China operations.
- In 2002, Standard Bank Investment Corp. was renamed Standard Bank Group.
- In 2002, Standard Bank bought Ugandan Commercial Bank.
- In 2003, the bank established investment banking operations in Russia and Brazil.
- Also in 2003, Standard Bank acquired control of Banco Standard Totta de Moçambique.
- In 2007, Industrial and Commercial Bank of China (ICBC) agreed to subscribe to new shares representing 20% of the newly-enlarged capital of Standard Bank Group Ltd. for ZAR 36.7-billion (USD $5.46-billion, HKD $42.32-billion, CNY 40.95-billion). Standard Bank was Africa's largest bank group and had operations in 18 African countries and 19 countries outside of Africa. It had 713 branches in South Africa and another 240 in the rest of Africa.
- In 2007, Standard Bank took over a majority stake in BankBoston Argentina from Bank of America for USD $120-million. BankBoston Argentina, to be merged into Standard Bank’s own Argentine operations, had more than 80 offices in the country and about USD $1.64-billion of deposits. Standard Bank would own 76.7% of the enlarged Standard Bank Argentina, with the remaining stake being owned by local investors.
- Also in 2007, Standard Bank merged its subsidiary Stanbic Bank (Nigeria) with IBTC Chartered Bank to acquire a 33% stake in the enlarged IBTC Chartered. As part of the agreement, Standard Bank then acquired an additional 17.1% of IBTC Chartered for ZAR 2.8-billion (USD$ 400-million) to hold a 50.1% stake of IBTC Chartered. This deal marked the first major investment by Standard into Nigeria, an oil-rich country. IBTC Chartered specialized in investment banking and had 56 offices in Nigeria.
- In 2008, Standard Bank's Kenyan subsidiary Stanbic Bank amalgamated with local rival CfC Bank, with Standard Bank ending up with 60% of the enlarged CfC Stanbic Holdings. CfC Bank was originally known as the Credit and Finance Corp. In 2016, the CfC part of the name was dropped and the Kenyan operations became Stanbic Bank Kenya Ltd. and Stanbic Holdings respectively.
- In 2009, Standard Bank invested USD $200-million of convertible loan in Russian-based investment bank Troika Dialog Group Ltd. Troika Dialog was the largest independent investment bank in Russia. Standard Bank would also contribute its Russian operations ZAO Standard Bank to Troika Dialog. In return for the two-stage transaction, Standard Bank would own a 33% stake in Troika Dialog.
- In March 2011, Standard Bank sold its 36.4% stake in Russian investment bank Troika Dialog to Russia's OAO Sberbank for USD $372-million. The sale was part of a deal by Sberbank to acquire all of Troika Dialog for USD $1-billion (RUB 28.55-billion). The only other shareholder of the investment bank was TDM Partnership.
- In August 2011, Standard Bank sold 55% of its 75% stake in Standard Bank Argentina and its two local affiliates to China's ICBC. ICBC acquired an additional 25% stake from other shareholders, bringing its ownership in Standard Bank Argentina to 80%. The total cost to ICBC was USD $600-million (ARS 2.49-billion, ZAR 4.31-billion, CNY 3.86-billion, HKD $4.68-billion). Standard Bank Argentina had 103 branches. ICBC and Standard Bank also agreed to inject a total of USD $100-million of new capital into the Argentine bank based on their new ownership levels.
- In January 2014, Standard Bank sold 60% of its London-based global markets business to China's ICBC for USD $765-million (ZAR 8.64-billion, CNY 4.63-billion, HKD $5.94-billion). The deal also gave ICBC a call option to buy another 20% of the unit for five years, starting two years after the closing of the transaction. If the call option is taken up by ICBC, then Standard Bank can exercise a put option to force the Chinese bank to purchase the final 20% of the unit. The global markets unit provides trading and other services in foreign exchange, commodities, interest rates, debt and equity products.
- In 2018, Standard Bank's wholly-owned, British-registered Stanbic Africa Holdings Ltd. (SAHL) tendered offer to acquire another 15% of Kenya's Stanbic Holdings for KES 5.6-billion (USD $56-million). SAHL is the parent company of most of Standard Bank's African subsidiary banks, and already controls 60% of Stanbic Holdings, which is the parent company of Stanbic Bank Kenya Ltd. and SBG Securities Ltd. Initially, Stanbic Holdings' public shareholders tendered 8% of their holdings to SAHL for KES 3.0-billion (USD $30-million). In July 2018, SAHL extended its offer to acquire another 7% stake for at the same initial offer price.
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