Wednesday, June 17, 2009

Six foreign banks plan to quit SA - PwC

By Mzwandile Jacks

The following correction was published on June 12, 2009 - Business Report reported on Wednesday, June 10, that a survey by PricewaterhouseCoopers (PwC) showed that six foreign banks were intending to leave South Africa. This is incorrect.
The PwC survey said that only two foreign banks had indicated their intention to withdraw at the time of the field work, which was conducted in February. And one of these two banks indicated last week that it would in fact not be withdrawing from the country.
The Bank of Athens has asked Business Report to reiterate that it has no intention to leave the country.

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Six foreign banks plan to quit doing business in South Africa after the global financial crisis has forced them to review their strategies, according to a survey by PricewaterhouseCoopers (PwC).

Commenting yesterday on the contents of the survey on banking in South Africa, Tom Winterboer, the banking and markets leader at PwC, said the plan could cause massive job losses.

"The most problematic issue here is that it seems as if they are losing confidence in South Africa. They would prefer to put their money elsewhere. This is not good for the country and our economy."

Catherine du Toit, an equities analyst at Sanlam Investment Management, identified Commerzbank, Dresdner Bank and the South Africa Bank of Athens as companies that were planning to quit South Africa soon.

"These banks have not been making money in South Africa," she said. "In their countries of origin they have been assisted through government funding. Once they have received that kind of assistance, their businesses would have to be focused at home."
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Brian Metcalfe, a Canadian researcher who worked with PwC on the survey, said that Commerzbank intended to leave South Africa.

"This is public knowledge," Metcalfe said, refusing to name the other banks.

Commerzbank took over Dresdner Bank last year in a e9 billion (R102bn at current exchange rates) deal creating a second major national banking champion after Deutsche Bank.

An analyst, who did not want to be named, said this could be confirmation that Dresdner Bank was on its way out of the country. Attempts to get comment from Dresdner were unsuccessful last night.

Herman Bosman, the chief executive of Deutsche Bank, said the company had no intention of leaving South Africa as it saw this country as a key emerging market.

Steve Meintjes, a senior analyst at Imara SP Reid, said the Royal Bank of Scotland was a "candidate for departure" because it had been taken over by the UK government in November, paving the way for a larger government role in Britain's banking sector.

But Hector Zarca, the chief executive of the South African Bank of Athens, said that although the shareholders were foreign, this was a South African firm. "There is no intention for us to leave this country."

Jessica Govender, the spokeswoman for Citibank, said South Africa's sixth-biggest bank by assets remained committed to its customers in the country and had no intention of leaving.