UPDATE 2-Standard Bank says in talks to sell London trading unit

Fri Nov 8, 2013 7:46am EST

Related Topics

* Sources say deal could be worth $500 mln

* Shares up 1.3 pct (Recasts, adds analyst comments)

By Helen Nyambura-Mwaura

JOHANNESBURG, Nov 8 (Reuters) - South African lender Standard Bank confirmed on Friday it was in talks to sell a controlling stake in its London-based global markets business, a deal sources have told Reuters would be worth over $500 million.

Africa's biggest bank declined to name the potential buyer, but two people familiar with the matter told Reuters in July it was in talks to sell the operation to its top shareholder, the Industrial and Commercial Bank of China (ICBC).

Standard Bank, which is 20 percent owned by ICBC, has been hiving off businesses outside Africa to concentrate on bulking up on the continent. Last year it finalised the sale of an 80 percent stake in its Argentine unit to ICBC.

"I would not be surprised if the buyer's going to be ICBC," said Johann Scholtz, head of research at Afrifocus Securities in Cape Town.

"It's positive for Standard Bank in the sense that the London business has not been profitable for a while and consumes quite a fair bit of capital."

A spokesman for Standard Bank said in July that it and ICBC were "jointly exploring areas of greater cooperation, including global markets and commodities".

The Johannesburg-based bank said in statement on Friday it was looking to sell a majority stake in the global markets business outside of Africa.

"The principal legal entity that would form part of a transaction is Standard Bank Plc, the group's London operation," it said.

"The envisaged transaction does not involve Standard Bank's existing investment banking, transactional banking and corporate banking operations outside Africa."

MINORITY STAKE

It said it would keep a minority stake in the business to maintain "continuity of access" for its African clients.

The business includes Standard Bank's commodity, rates and foreign exchange trading operations, one of the sources told Reuters in July.

Standard Bank is likely to get only less than half of the 13.8 billion rand ($1.3 billion) of the London business' capital, said another analyst who declined to be named because he is not authorised to speak with media.

"It's not that big in the overall scheme of things, it's a few billion rand," he said. "But at least it releases the capital trapped there in London. They will now be able to get some of that out and redeploy it in Africa and South Africa."

Standard Bank has agreed to sell its Asian loan book worth $1 billion to BNP Paribas SA and others, sources have also told Reuters.

Its shares, valued at $20.2 billion, were up nearly 1 percent at 125.50 rand at 1209 GMT, bringing gains this year even higher to nearly 6 percent, in line with Johannesburg's banking index. ($1 = 10.2993 South African rand) (Editing by David Dolan and Patrick Lannin)

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