Fitch Ratings forecasts Societe Generale’s African exit to fuel growth for Pan-African Banks
Fitch Ratings suggests that Societe Generale’s exit from Africa could pave the way for pan-African banks to expand, either organically or through mergers and acquisitions.
While this shift may present short-term challenges, such as increased competition and adjustments to regulatory demands, it is expected to ultimately benefit local banking sectors.
Societe Generale’s recent moves, including the sale of its subsidiaries in Ghana, Morocco and other African countries, reflect a broader trend among French banks reducing their African presence.
Fitch says it anticipates further divestments in the coming months, especially if attractive valuations are available to selling banks.
The departure of foreign shareholders like Societe Generale could pose challenges for divested subsidiaries, such as decreased access to global financial systems and potential disruptions in cross-border transactions. However, Fitch believes these hurdles are temporary, and banks typically have access to funding from development finance institutions.
Despite the challenges, Fitch sees significant opportunities for local and regional banks in Africa. The emergence of banking groups with pan-African ambitions, like Vista Group and Coris Bank, is creating credible competition for established players in South Africa, Nigeria, and Morocco.
The increased competition among pan-African banking groups is expected to drive credit growth, particularly in lower-risk segments, which could help preserve asset-quality metrics.
Fitch notes that French-owned African subsidiaries have been constrained by their parent banks’ conservative risk appetite and stricter capital management policies.
For the French banks themselves, the exit from African retail and commercial banking is seen as slightly credit positive. It allows them to refocus on more mature markets in Europe and activities with higher synergies, such as insurance and corporate banking.
Additionally, reducing their presence in Africa aligns with their conservative risk appetite and regulatory pressures from European banking supervision. Economic uncertainties and geopolitical tensions in some African countries also contribute to this strategic reassessment.
