Fitch Ratings has forecasted a transformative shift in Africa’s banking industry following alleged reports of Societe Generale’s decision to exit the continent.
According to Fitch, the move is expected to stimulate the growth of Pan-African banks, either through organic expansion or strategic mergers and acquisitions.
While this transition may initially present challenges, such as heightened competition and adjustments to regulatory frameworks, it holds the promise of long-term benefits for local banking sectors across the continent.
Societe Generale’s recent divestments, including reports of the sale of its subsidiaries in Ghana, Morocco, and other African countries, align with a broader trend among French banks to reduce their African footprint. Fitch predicts further divestments in the near future, particularly if attractive valuations become available to selling banks.
The departure of foreign shareholders like Societe Generale may pose temporary challenges for divested subsidiaries, including reduced access to global financial systems and potential disruptions in cross-border transactions. However, Fitch reassures that such obstacles are surmountable, as banks typically have access to funding from development finance institutions.
Despite these challenges, Fitch identifies significant opportunities for local and regional banks in Africa. The emergence of banking groups with Pan-African ambitions, exemplified by Vista Group and Coris Bank, is fostering credible competition for established players in key markets such as South Africa, Nigeria, and Morocco.
As competition intensifies among Pan-African banking groups, analysts anticipate a surge in credit growth, particularly within lower-risk segments, potentially bolstering asset-quality metrics across the industry.
Constraints Faced by French-Owned African Subsidiaries
Fitch Ratings highlights the constraints faced by French-owned African subsidiaries, primarily stemming from their parent banks’ conservative risk appetite and stringent capital management policies. These factors have often limited the subsidiaries’ ability to pursue growth opportunities and expand their lending activities.
For the French banks themselves, the decision to exit African retail and commercial banking is viewed as slightly credit positive. It enables them to redirect their focus towards more established markets in Europe and sectors offering higher synergies, such as insurance and corporate banking.
Moreover, reducing their presence in Africa aligns with their conservative risk appetite and addresses regulatory pressures from European banking authorities. This strategic realignment is further motivated by economic uncertainties and geopolitical tensions in select African countries, prompting a reassessment of their investment priorities.
While these developments signify a shift in the African banking industry, they also present opportunities for local and regional banks to expand their market share and capitalize on emerging growth prospects. As Pan-African banking groups navigate this evolving landscape, they are poised to play a pivotal role in driving economic development and financial inclusion across the continent.
Meanwhile, the headquarters of the French Bank Société Générale has dismissed rumours suggesting its withdrawal from the Ghanaian banking sector, describing them as baseless speculation.
The bank clarified that it is restructuring its operations to better align with international market dynamics.
Addressing concerns raised by shareholders regarding the alleged departure during the 44th Annual General Meeting, Société Générale’s Managing Director, Hakim Ouzzani, emphasized that the reports were not originating from the bank itself.
“Some rumours have indeed taken root regarding SG Ghana. But it’s important to mention to all our stakeholders and our shareholders that the news item being circulated in the media was not issued by the group nor by SG Ghana. We don’t want to comment further. But really, I insist on the papers is not by SG, it is not by SG Ghana.”
Hakim Ouzzani
Widely circulated reports have indicated that Société Générale was exiting the Ghanaian banking sector after 20 years. Société Générale recently finalized deals with Saham Group to offload its Moroccan operations. In 2023, it was divested from several African countries, including Congo, Equatorial Guinea, Mauritania, Burkina Faso, and Chad.
Citing its long-standing presence in Africa, Société Générale aims to focus its resources on markets where it can assert itself as a leading bank, aligning with its overarching strategy.
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