1
Global Competitive Trends: 2010
Prepared by Mzoxolo Gulwa – Strategic Insights – Group Marketing August 2010
Topics covered 2
Global trends
Africa-specific trends
Summary of global competitive trends 3
We see a sharp focus on emerging markets by international banks, particularly on Asia and Africa
HSBC has declared its interest in Africa, a market it had largely ignored for years
Oil producing African nations are hot expansion favourites for the big international players
The East Africa integration project presents a great growth opportunity for regional players
African banks are partnering Chinese lenders for CIB-related deals
Telecoms continue to eat on banks‟ transaction fees, in the Africa space
In the SA space, banks look to the low income segment, particularly for lending
Asia – International banks are now focusing on emerging markets 4
Asia is becoming a key emerging markets destination for international banks whose earnings took a knock from the global financial crisis
• HSBC has moved its key executives from London to Hong Kong, in an attempt to sharpen its focus on Asia • In addition, the bank will list in Shanghai
• A number of international Private Banks operating in Asia have announced plans to expand their operations in the region
• Some have made senior appointments while others have hired dozens of wealth managers • The number of individuals with at least $1m of investable assets in Asia-Pacific rose 26% to reach 3m in 2009
Africa – International and African players plan to expand into our markets 5
Key competitors have announced plans to enter or expand existing operations in some of Standard Bank‟s key African markets
The likes of RenCap, Merrill and HSBC will use SA as a springboard in their expansion to the rest of the continent • The Moscow-based investment bank recently opened rep office in SA and Uganda and has plans to enter Tanzania.
• BoA will pump cash into the SA Merrill Lynch subsidiary, which will be used to expand to African countries with potential for infrastructure spending. Ghana, Angola and Nigeria seem to be targets.
• Citi plans to increase its business on the continent by about a quarter in the next two to three years. In addition, it plans to setup new operations in three unnamed countries. Likely expansion targets for Citi include Angola .
• The bank had set 2010 as the year which it will implement its five-year expansion plan into the rest of the African continent. Targeted countries include DRC. (So far in the year, KCB has not delivered on this plan.)
• Togo-based Ecobank is set to continue its march into the rest of Africa as they have received licenses to operate in Angola and Zimbabwe respectively. Their planned Angola rep office will focus on CIB-related activities, while they will offer full service banking in Zimbabwe.
• FirstRand is one of the foreign banks that have registered interest to buy troubled Nigerian bank(s). In Nigeria, the bank is currently staffing its yet to be regulatory approved rep office. In addition, it plans to expand its FNB franchise into countries that include Tanzania and Angola.
Africa – International players are eyeing oil producing countries 6
HSBC and Standard Chartered are amongst international banks who have announced strategies to expand to oil rich African nations to tap rising oil and commodities trade flows
• Has expressed its desire to increase its „influence‟ on Africa and truly be the “world‟s local bank” • Is bidding for a full banking license in Libya • Plans to establish a rep office in Nigeria
• Apart from the oil producing countries, HSBC is understood to be lining up a takeover bid for SA‟s Nedbank
• Is bidding for a full banking license in Libya (will, meanwhile, open a rep office) • Has opened a rep office in Angola • Plans to hire 50 more people in SA as it aims to grow its wholesale business
• Just like HSBC, StanChart has been linked with a possible take over of Nedbank • Aims to grow the percentage of profits it generates from the Middle East and Africa, which last year was 16%
Africa – partnerships with Chinese banks for CIB deals 7
A number of African banks are following on the footsteps of Standard Bank in partnering Chinese lenders for project financing deals on the continent
Africa – East Africa economic integration 8
Banks operating in East African countries will look to expand their operations to the rest of the region, to facilitate trade and investment, following the launch of the East Africa Community (EAC) initiative
Many have already made their intention clear in this regard . . .
Recent entries into a Standard Bank East Africa market:
Banks to watch in the region include: • In the past 2 years, KCB invested heavily on branch expansion in all of its East Africa markets
• Business model which is focused on the previously unbanked poses a threat in Kenya and Uganda • Effective deployment of its mobile offering in rural areas is a concern • Partnership with M-Pesa for the M-Kesho service threatens to put retail banks in Kenya out of business
Africa – Telecoms continue to threaten banks with M-Banking offerings 9
Leading telecoms are offering m-banking to millions of their subscribers in the various African countries they operate in
The huge unbanked population in most African markets plays into the hands of the telecoms
The key area of concern for banks is the loss of potential transaction fees to telecoms
• Is currently offered in Kenya and Tanzania • Telecoms operating in various African countries see the M-PESA business model as a benchmark, due to its success in Kenya, where it has 9.5m customers • Will be launched in SA, in partnership with Nedbank
• Zain‟s Zap is currently offered in Kenya, Tanzania, Uganda and Ghana • New owner of Zain, India‟s Bharti, might expand Zap to the rest of the African countries where Zain has operations • Meanwhile, MTN is making inroads in the mobile money space, particularly in Uganda • Orange is someone to watch, going forward, as the company has announced a pan Africa expansion strategy for its mobile money offering
Africa – Banks turn to youth in bid to grow revenue 10
African lenders, looking for new growth are now targeting the youth segment
The banks are rolling out tech-savvy products to woo the youth
The products, usually accounts crafted to allow for a pay-as-you-use model, most target those who just finished varsity, in a part time job, newly employed or self employed
Research shows that in most Standard Bank Africa markets the majority of youth (18 – 35) remain unbanked
Launched in April 2010, the KCB Bankika is a personal and business package, targeted at the youth and offers cheap access to loans as well as mobile banking.
SA – Banks move down the value chain in pursuit of new revenue streams 11
FNB and Absa have announced new distribution points to specifically cater for the low income market
FNB has rolled out 18 Easy Plan branches, while Absa aims to setup five „McDonalds style‟ low-cost branches by year end
The key focus for the two banks, in their respective strategies, is lending - with quick turnaround time
While Capitec has continued to focus on the low income, it has developed interest in the middle income segment
Snapshot on the number ( ) of countries each Pan Africa competitor has 12
(16)
(30)
(17) (15)
(15)
(16)
