The South African bank moving R5 trillion every single day

Standard Bank’s Corporate and Investment Banking (CIB) division moves R5 trillion through its operations across South Africa, the broader continent, and major international financial hubs every single day. 

While this may pale in comparison to JP Morgan’s immense $10 trillion a day, it indicates the significant scale of the bank’s operations in Africa. 

This has come as a result of the bank’s steady expansion across Africa, with it being one of the few South African corporate giants to do so successfully. 

Speaking at the bank’s second annual African Markets Conference, Standard Bank CIB CEO Luvuyo Masinda outlined the scale of the business and the responsibilities that come with it. 

Masinda has led the unit, long seen as the bank’s crown jewel, for nearly two years and is considered one of the frontrunners to become group CEO upon Sim Tshabalala’s retirement at the end of 2027. 

The unit’s prowess is well-known, as it generates over half of Standard Bank’s headline earnings and has more than 3,000 clients, including central banks and nation-states.  

Masinda outlined the immense scale of the business, explaining that the CIB division’s role is to facilitate capital flows across Africa and capture value from capital inflows into the continent from major financial hubs. To do this, it has to be big. 

Masinda said the division sits on R1.1 trillion in deposits, making up nearly a third of the bank’s entire base, and distributes more than R600 billion in advances every year. 

Across the bank’s 3,000 CIB clients, over R5 trillion is moved in the form of payments across the continent every day, Masinda revealed. 

This is coupled with the division operating the backend of some of Standard Bank’s personal accounts, such as the Shyft offering and individual investment trading platforms. 

Masinda explained that the division generates around R65 billion in revenue and has strangely benefitted from elevated uncertainty. 

Heightened uncertainty translates into increased client activity, resulting in surging trading revenue and rising fee and commission income. 

In the first six months of the year, the CIB division posted trading revenue of R11.9 billion and fee and commission income of R5.2 billion. 

This was coupled with R53 billion in sustainable financing mobilised across the continent and a record R123 billion in investment banking origination. 

Painting Africa Standard Bank blue

Standard Bank’s CIB division has led the bank’s expansion into Africa, often following its clients as they expand and seeking to capture value from growing trade flows with the rest of the world. 

The expansion has proven immensely rewarding for the CIB division and the bank more broadly, now generating the majority of its revenue outside South Africa. 

Crucially, this expansion has ensured the bank is well-placed to ride the wave of much faster-growing African economies outside of its home market. 

The bank’s scale also opens doors for it on the continent, with it often being the only game in town for facilitating sovereign financing and the scale required by multinational corporates. 

This has increasingly been challenged by American banks, which are looking to tap into Africa’s increasing trade with the Middle East and Asia. 

As a result of this, Standard Bank recently opened an office in Egypt after servicing many of its clients in the country through “briefcase banking”. This refers to bankers flying in and out of a country to serve clients without having a physical presence. 

One of Standard Bank’s biggest clients in Egypt is the nation’s central bank, which Tshabalala explained to Daily Investor had historically been serviced without a physical office. 

With the rise of Middle East capital flowing into the continent, particularly in North and East Africa, Standard Bank saw it necessary to open a physical office in Egypt to capture value from these flows. 

“Now we consider it is appropriate for us to actually have people on the ground who service them and our clients from the Gulf states,” Tshabalala said. 

“These companies have a lot of interest in the African continent, particularly in its ports such as Dar es Salaam and Maputo.” 

A number of Standard Bank’s clients in Egypt are also increasing their presence in East Africa, a region that is growing quickly and contributes meaningfully to the bank’s financial performance. 

“This forms a crescent, if you want, from East Africa up to Egypt and then the Gulf states. We want to facilitate the movement of people, goods, ideas, and capital in that space,” Tshabalala said.

He explained that the bank remains on the front foot regarding further expansion, with a R13 billion war chest.

Masinda is set to lead this expansion while defending the bank’s enviable position against competitors, aiming to dominate energy and infrastructure development in Africa.