Banking: South Africa's Standard Bank making moves
South Africa's Standard Bank moved into new offices in London's Gresham Street last week. This week it's done a deal to borrow USD1,000 million in Chinese money - with an interesting plan.
The money comes from ICBC, which is a major shareholder in Standard Bank plus Bank of China, China Development Bank and China Citic Bank, says a statement from Standard Bank.
The money is not to shore up Standard which is considered one of Africa's safest banks.
Standard Bank Chief Executive Jacko Maree is quoted in the statement as saying "This deal will serve as a platform for future cooperation between Standard Bank and these banks across a range of different banking products and geographies to support Chinese companies going global into emerging markets."
Chinese companies have been investing heavily in several African countries - in particular in minerals and low-tech manufacturing. There has also been investment in agriculture.
But there are administrative problems: simply getting the money where it's needed is not as easy as it appears: the remimbi remains difficult to convert. And some businessmen find it difficult to find banking facilities when they turn up with lots of cash to buy into local businesses because of the problems in performing due diligence in a country with rudimentary records for both people and funds.
And so access to local borrowing will overcome administrative problems for Chinese businesses. And it will provide, in effect, the four big Chinese banks with an agent to handle its African loans - and the local administration of them.
So, the deal provides the four banks with indirect access to the local market - but effectively direct access to Chinese investors overseas.
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