What is Standard Bank’s footprint in Africa and the DRC?
We are the largest banking organization in the continent, with a presence in 20 countries. We are also the largest bank by assets. In the DRC, where we manage more than US$300 million in assets, we have been present since 1992, following our acquisition of ANZ Grindlays. Over the last three years, we have made a considerable capital investment into the country, both in terms of cash capital and infrastructure capital. Indeed, we have completely reengineered our business in the DRC, including new IT systems and technology. We spent US$12 million putting that in place. We became primarily a corporate investment bank, so we do not look at retail banking anymore. We also increased our net equity to over US$45 million.
How important is the mining industry for Standard Bank?
Across the continent, mining is very important for the Standard Bank group. In the DRC we are probably the biggest bank in the industry. We provide financing to the big multinational miners as well as the different suppliers to the mining industry. Because of our relationship with the Standard Bank group, we are able to support any kind of transaction in the sector. For examples, with one of our mining clients we were able to facilitate a US$500 million financing.
How attractive is the DRC for mining investment?
The DRC has huge mineral deposits across a diversity of minerals: copper, cobalt, gold, diamonds, tin and others. There is an estimated US$24 trillion of mineral reserves in the DRC.
The ore grades are very high, and the yields are very good, so, for mining companies, there are huge returns to be made in DRC. Literally 60 km from Lubumbashi, in the Zambia copper-belt, grades are much lower. That said, the DRC faces other challenges that need to be addressed. While important players like Barrick, Glencore, Ivanhoe and others are already here, majors such as BHP Billiton, Vale, Rio Tinto and Anglo American need to see a change in the macroeconomic and socio-political situation in the country in order to enter the sector.
President Félix Tshisekedi has started making the right impression, by addressing corruption and improving the judicial system to encourage foreign direct investment, which is a good start and the government will need to continue to do a considerable amount more to address the socio-political and socio-economic situation in the country.
How has COVID-19 affected the industry in the DRC, and what pace of recovery do you expect?
Covid-19 has primarily been felt because of the slowdown in China, which is the biggest importer of both copper and cobalt from the DRC. We have seen price reductions in both metals, but as of May 2020 China is starting to reopen its businesses, so trade flows will increase again.
What does this mean for your banking business?
We have had a very good 2020 so far, leveraging of the re-engineering of our business that we have put in place as part of our overall restructuring in 2018-2019. This gives us the opportunity to ensure that, notwithstanding the challenges, we can still operate profitably.
Through the digitization of a number of our systems and platforms, our clients can safely transact with us from wherever they are and with the straight through processing that has been implemented, there is greater level of efficiency, quicker turn-around time and better operational results for both the clients and the bank.
Would you like to add a final message to our audience?
Standard Bank has been present in the country for 28 years and has a demonstrated commitment to the country. Africa is our home and we drive her growth. The same is true for the DRC. Our objective is to become the number one corporate investment bank in the country. We will continue to improve our platforms and services to make sure that, from the clients’ perspective, we cater to their needs.