Source: newsthemegh.com
Just twenty years after entering the Ghanaian market, the French bank Société Générale has decided to leave.
The bank has decided to stop doing business in Tunisia and Cameroon in addition to Ghana.
According to people with direct knowledge of the bank, Société Générale has hired investment bank Lazard to find possible purchasers for its businesses in Ghana, Cameroon, and Tunisia. It has been suggested that Absa Bank is giving the purchase of these subsidiaries significant thought.
Société Générale and Saham Group concluded agreements a few weeks ago for Société Générale to sell its Moroccan operations. It sold off its holdings in a number of African nations last year, including Burkina Faso, Equatorial Guinea, Congo, Mauritania, and Chad.
As stated on its website on April 12, 2024, the Société Générale group plans to focus its resources on markets where it can establish itself as a major bank, in line with the firm’s overall strategy. The group has a long history of involvement in Africa.
The impending withdrawal of Société Générale from Ghana and other African nations is reminiscent of similar measures implemented by other European banks. Notable names include Standard Chartered and Barclays, the latter of which withdrew from certain nations but continued to operate in Ghana and a few other African nations.
Furthermore, more recent arrivals like as Atlas Mara have also departed the region, with Credit Suisse keeping solely its South African business. As early as 2018, the French bank Groupe BPCE pulled out of its non-core operations in a number of African nations.
The high cost-to-income ratio is the main reason why European banks, particularly Société Générale, have left Africa.
Compared to decades ago, these banks are now facing lower returns on their investments in Africa. The environment of banking has changed, necessitating large expenditures in IT infrastructure and adherence to central bank-mandated regulations.
Over time, the minimum capital requirements of numerous African central banks have also been raised.
Furthermore, profit margins have been further squeezed by heightened industry competition as well as the stagnating economic growth in many African nations.
The departure of European and other non-African banks raises the possibility that African banks—especially those based in South Africa and Nigeria—may take the lead in the continent’s banking industry.