Standard Chartered Group has announced its intention to sell its Wealth and Retail Banking Businesses in Uganda, Botswana, and Zambia.
The Wealth and Retail Banking arm of their business serves both corporate and personal accounts. In the announcement, the Bank indicated it will use the proceeds to bolster its affluent Corporate and Investment Banking business.
For clients of Standard Chartered Bank Uganda, there is no cause for panic, as this is a strategic decision that will take time and requires regulatory approvals and transition. The bank, staff, and systems will continue to operate effectively until a potential buyer has been identified and all regulatory approvals have been obtained, a process that might take close to two years.
This is not the first time we have seen such a strategic divestment by global banks. A recent example is ABSA Bank, which bought the Wealth and Retail Banking Businesses of the then Barclays Bank in Africa. The transition for customers from Barclays to ABSA was smooth, so there is no cause for concern.
Treasury bond Investors
For those who have Standard Chartered Bank as your custodian bank for your treasury bond investment, nothing will happen to your bonds. The actual treasury bond security is held through the CSD system of Bank of Uganda, which will continue to be the case. When the transaction is completed, nothing will change as the potential new company will take over the custodian operations of the current bank, and you will continue to receive your coupons and invest as usual.
This is further emphasized by the fact that for such a transaction to go through, Bank of Uganda, the supervisor, will have to approve it. There will be full transition plans to ensure a smooth transition from one brand to another, and your investments, assets, banks, and even liabilities (loans) will not be disrupted.
Does this decision have anything to do with Uganda’s current economic condition?
Most financial institutions globally are shifting from brick-and-mortar and retail banking, which requires more resources but yields lower margins, to Corporate and Investment Banking, (CIB) which requires fewer resources but yields higher margins.
Global banks are noticing that it’s easier to fast-track the growth of their businesses by shifting their business model to serving a few but highly affluent clients through bespoke products and investments (as they are doing in Kenya and Nigeria on the African continent) rather than retail customer banking. This is part of the reason Standard Chartered Group might be selling off.
You could say that Uganda’s Wealth and Retail Banking didn’t make strategic sense for the global company to retain the unit. However, this does not mean they won’t stay in the country with their CIB Business and pivot to serving a niche client and their needs. According to the communication by the Bank’s head of Wealth and Retail Banking, Paul Badu, Standard Chartered Bank will continue to have a presence in Uganda through their strong and growing CIB Business.
