The Standard Bank building in Rosebank, Johannesburg. Picture: KEVIN SUTHERLAND/SUNDAY TIMES
The Standard Bank building in Rosebank, Johannesburg. Picture: KEVIN SUTHERLAND/SUNDAY TIMES

Standard Bank Group, Africa’s biggest lender, says it will sell its 20% stake in an Argentinian financial services group and use the proceeds to build up its African operations.

While ICBC Argentina “has performed strongly” since Standard Bank sold its controlling stake in 2011, “Argentina remains off-strategy for the group as a geography and there is little overlap” with the lender’s main client bases, it said on Thursday.

“Standard Bank Group considers that an exit from its investment in ICBC Argentina to realise capital for reinvestment into its African strategy is appropriate.”

In 2011, the group sold a controlling stake in its Argentinian financial services operations to Industrial and Commercial Bank of China (ICBC), but retained a 20% shareholding.

As part of the agreement, Standard Bank was given the option to sell its remaining stake to ICBC if it gave notice by November 30 2019.

The strike price of the put option is $180.8m (about R2.7bn).

The Argentinian investment had a net asset value of R1.6bn on Standard Bank’s books at the end of June, and contributed R432m in half-year profits.

The difference between the disposal price net of tax and the group’s carrying value in ICBC Argentina would be recognised as a gain, outside of headline earnings, of about R600m, Standard Bank said.

Argentina is grappling with one of the world’s highest inflation rates. In April, Reuters reported that economists had raised their forecast for Argentina’s 2019 inflation rate to 36%, from a previous estimate of 31.9%.

hedleyn@businesslive.co.za