Hsbc Mulls South African Exit As European Banks Pull Back

HSBC is reported to be exploring the sale of its business in South Africa as the global investment bank continues to reduce its exposure to Africa in order to focus on its core target markets in Asia.

It is not yet clear which bank will purchase HSBCs business and securities unit in South Africa, but it has been widely reported that several financial institutions from China and the United Arab Emirates UAE are interested in an acquisition. Last week, it was reported that FirstRand, the biggest bank in Africa by market capitalisation, is also interested in agreeing a deal for HSBCs South Africa business.

Part of the reason for the move is likely to be that HSBC has been committed for some time to an Asian pivot. The London-based lender has deep historical roots in Asia and its new CEO, Georges Elhedery, has pledged to simplify the banks global structure in a bid to cut costs and maintain a sharp focus on target markets in the Far East.

To this end, in July, HSBC agreed a deal with Absa for the South African bank to acquire HSBCs domestic wealth management, and personal and corporate banking businesses in Mauritius. HSBC has also been selling non-African international businesses. Last year, the bank agreed to sell its Canadian business to the Royal Bank of Canada for 9.8bn and in 2021, HSBC exited the US retail banking market. By contrast, in August this year, HSBC agreed to buy Citigroups retail wealth management business in mainland China.

Mkhuzo Mwachande, an investment banker in Cape Town, tells African Business that Asia contributes nearly 70 of HSBCs group earnings, making it imperative for the board to prioritise this region.