Takeover bid for Portugal’s BPI bank opens way to consolidation in the Angolan banking sector

MARCH 2ND, 2015    FEATURES

Consolidation of operations in the Angolan commercial banking sector, long-awaited by analysts, my experience its most important consolidation to date as a result of the tender offer on Portuguese bank BPI.

Angolan businesswoman Isabel dos Santos has almost 20 percent of BPI, the target of a takeover bid by Spain’s La Caixa bank, and this week is expected to announce if the stake is up for sale, and Angola is considered key to coming to an agreement.

The Africa Intelligence Monitor newsletter said Isabel dos Santos is only interested in selling the BPI stake through a prior agreement to ensure Santos can purchase the 50.01 percent that BPI owns in Banco Fomento Angola, which has a leading position in the Angolan banking market.

The possibility of an agreement to that effect is considered high, according to the Africa Intelligence Monitor, and the plan is further down the line to merge BFA, in which Santos has had a 49 percent stake since the end of 2008, with the bank that she already controls, BIC.

The merger would create the largest commercial bank in Angola, of a size that would enable it to compete regionally, something that is currently lacking from even larger financial institutions, which are still far smaller than South Africa’s Standard Bank, ABSA and Nedbank.

The Africa Intelligence Monitor said La Caixa has shown little interest in the Angolan banking market, which incidentally has been a focus of recent concerns.

The implementation of European rules to the exposure it has to BFA led BPI to announce in December a decrease in its capital ratio, which has an impact on all its financial activities.

The penalty follows the European Commission’s exclusion of Angola from the list of third countries with regulation and supervision equivalent to the European Union.

The result was that Deutsche Bank gave a “sell” recommendation on BPI shares for “because of the risk for the results obtained from Angola focused on oil and the impact of high exposure to the country’s sovereign risk, via its BFA subsidiary.”

At the end of last year, the S&P rating agency pointed to exposure to Angola as a major factor in their pessimistic outlook for BPI.

A recent report by the Eaglestone consultancy said the existence of 29 banks in Angola was “unsustainable” and predicted “several short to medium term consolidation movements.”

The drivers of consolidation, it said, would be foreign players, but also the need of some banks to gain in size, or to meet the new and more stringent capital requirements and the current shareholder structure of Angolan banks.

In banks such as BIC, CNI, BCH and Banco Valor, managers are still major shareholders, and there is room to find an international partner or even directly sell a stake.

The Angolan press has reported a possible merger of the two largest banks in the country, BIC and BFA at a time when a merger of BPA and Russian-owned VTB Africa, is already underway. (macauhub/AO/PT)