StanChart looks to divest some Africa operations

Reuters

Standard Chartered (2888) is exploring a potential divestment of its wealth and retail banking operations in Botswana, Uganda and Zambia, it said yesterday, as the banking giant looks to free up capital in the midst of a broad shake-up.

The Asia-focused lender, like rival HSBC (0005) is restructuring its business to focus more on affluent individual customers and international companies that are likely to yield more in fees for the bank.

It has for some time been pivoting away from its once globe-spanning empire to focus on core businesses as it bets on strong economic growth in Asian markets and aims to rein in expenses.

Standard Chartered said the potential exits in Africa would be the first in a small number of business divestitures in accordance with its new target of doubling investment in its wealth unit while paring back retail banking.

"The group will concentrate its resources in these markets on serving the cross-border needs of global corporate and financial institution clients," said Standard Chartered.

The bank, like HSBC, has in the recent past reaped the benefits of higher borrowing costs and comparatively resilient wealth generation and economic growth in Asia.

"This new move, if it happens, is therefore not a surprise and was something they had hinted at in their most recent results presentation," said Gary Greenwood, equity research analyst at Shore Capital.

StanChart said while announcing its third-quarter earnings in October that it was looking at opportunities to sell some or all of a small number of businesses where the "strategic rationale is not sufficiently compelling."

The cost-cutting measures will see the lender save around US$1.5 billion (HK$11.7 billion) over three years while expenses climb amid expanding business operations and rising pressures from sticky inflation.