French Bank, Société Générale has decided to exit the Ghanaian market after just two decades of operation. In addition to Ghana, the bank has also opted to withdraw from Tunisia and Cameroon.
Sources close to the bank have disclosed that Société Générale has engaged investment bank Lazard to explore potential buyers for its operations in Ghana, Cameroon, and Tunisia.
There are indications that Absa Bank is seriously contemplating the purchase of these subsidiaries. Recently, Société Générale finalized deals with Saham Group to offload its Moroccan operations.
Last year, the bank divested its interests in various African countries, including Congo, Equatorial Guinea, Mauritania, Burkina Faso, and Chad.
With a longstanding presence in Africa, the Société Générale group aims to focus its resources on markets where it can establish itself as a leading bank, in line with the group’s overall strategy, as outlined on its website on April 12, 2024.
Société Générale’s decision to withdraw from Ghana and other African countries is in line with similar moves made by other European banks.
Notable examples include Barclays and Standard Chartered, with the latter pulling out of certain countries while maintaining a presence in Ghana and a few other African nations. In addition, newer players like Atlas Mara have also exited the continent, while Credit Suisse is only keeping its operations in South Africa.
Groupe BPCE, a French bank, had already divested from its non-core businesses in various African countries back in 2018.
The primary reason for the departure of European banks, including Société Générale, from Africa is the high cost-to-income ratio. These banks are experiencing lower returns on their investments in Africa compared to previous decades.
The changing banking landscape necessitates substantial investments in IT infrastructure and compliance to adhere to regulatory standards set by central banks. Many African central banks have raised minimum capital requirements over time as well.
Moreover, heightened competition in the industry coupled with sluggish economic growth in numerous African nations has further compressed profit margins.
The exit of European and other non-African banks indicates that African banks, particularly those from South Africa and Nigeria, could emerge as key players in the continent’s banking sector.
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