Popularly known as Stanchart, the country’s third largest bank is disposing of its Wealth and Retail Banking unit (WRB), which covers individual accounts, businesses and includes personal transactional accounts, loans and other services for different classifications of account holders.
It will only retain its Corporate and Investment Banking unit, which covers banks and non-bank financial institutions, government and government-related enterprises, multinational corporates and development organisations.
Last available figures obtained by Mmegi indicate that the Corporate and Investment Banking unit accounted for about 20 of the bank’s 430 employees.
In a statement to the Botswana Stock Exchange on Wednesday, Stanchart’s board of directors said it was exploring the sale of its WRB business, as part of an announcement made on October 30 by its London-based parent group, Standard Chartered PLC.
“Discussions relating to the proposed disposal of the WRB business are at an early stage and any sale of the WRB business will be subject to, among other things, regulatory approvals and market conditions,” the local directors said. “Shareholders are cautioned that there is no certainty at this stage that any discussions will lead to a formal transaction,” they added.
The sale will also take place in Standard Chartered PLC’s subsidiaries in Zambia and Uganda in line with a decision to “reshape” the mass retail business and “sell all or part of a small number of businesses where the strategic rationale is not sufficiently compelling”.
In a separate memo seen by Mmegi, local Stanchart officials spoke of the “difficult decision” and sought to assuage concerns, saying a town hall meeting would be held shortly on the latest developments.
The officials described the WRB unit as a “good business” and one where a lot of hard work and dedication had been demonstrated. Every attempt would be made to minimise disruptions and the WRB business would be “well placed to thrive under new ownership,” the officials said.
By Press time yesterday, Mmegi was unable to secure comment from Stanchart officials on the latest developments.
However, Keitshokile Basuti, executive secretary of the Botswana Financial Institutions and Allied Workers Union (BOFIAWU), told Mmegi that Stanchart had made assurances that regulatory and statutory compliance would be strictly observed in the process.
“The CEO has assured us that both regulatory and statutory compliance will be strictly observed and adhered to and (there would be ) continuous engagement with key stakeholders of which BOFIAWU is one, to minimise disruption for clients and impact to employees. “BOFIAWU will be monitoring and following the developments with keen interest as they unfold and fully engage the bank on any issues that may affect employee welfare and working conditions,” he said in an emailed response to Mmegi enquiries.
Basuti added: “Where we are (is that) we can’t say whether they will any negative impact on our members until the transaction is realised or takes place.”
Separately, Stanchart employees who spoke anonymously with Mmegi, spoke of an atmosphere of panic at the bank, as the announcements on Wednesday came out of the blue.
“The initial announcement by the group in October did not specify any countries, but spoke rather in generalities. “We have been doing quite well in recent years, with steady profits and the drive for digitisation setting a path for growth. “But our managers are explaining that this is a decision that comes from London and the principal shareholder has decided to take that route,” one employee said.
Stanchart’s pretax profits in the first six months of the year rose by a modest six percent to P254.5 million, helped by a “steady growth in operating income, cost management strategies and quality of the loan book”.
According to its financials, the WRB unit raked in pretax profits of P131.2 million in the six months to June 2024, compared to P123.3 million for the Corporate and Investment Banking unit. In the half year to June 2023, the WRB unit posted pretax profits of P119.5 million, compared to P121.3 million for the Corporate and Investment Banking unit.
Local analysts said while Standard Chartered PLC wanted to focus on large corporate entities, its move would likely be fraught with challenges as the retail sector is the larger, more consistent generator of profits in the local market.
Generally in the local market, large corporates provide deposits and borrow less, earning higher interest rates on their deposits and paying less on the loans they do take. The retail sector deposits less and borrows much more, earning lower interests on its deposits and paying significantly higher rates on loans.
That combination means banks generally make loans to the retail sector from the corporate deposits, paying out less in deposit interest to the retail sector and making more from the loans they make to the sector.
According to a September Bank of Botswana survey of 100 local firms across various sectors, the majority of businesses prioritised financing their operations from retained earnings, rather than loans and equity.
Stanchart first set up in Botswana in 1897, expanding into the country from the gold and diamond fields of late 19th century South Africa. The bank operated from Mafeking and provided basic services in Lobatse on a weekly basis. Permanent branches were established in 1958 in Lobatse and Francistown as well as Mahalapye in 1963 and Gaborone in 1964.
Stanchart and Barclays, the country’s only banks at Independence, were critical in the changeover from the Rand Monetary System to the Pula in the 1970s. The banks were also essential in the operationalisation of regulated formal banking activities.
Barclays officially exited the country four years ago under a P17 billion deal in which the Absa Group acquired all of Barclays’ African operations.
