French Bank Société Générale exiting Ghana

Sources close to the bank reveal that Société Générale has enlisted the services of investment bank Lazard to seek potential buyers for its operations in Ghana, Cameroon, and Tunisia.

Société Générale, a French bank, has made the decision to withdraw from the Ghanaian market just twenty years after entering. Alongside Ghana, the bank has also chosen to exit operations in two other African countries, namely Tunisia and Cameroon.

Sources close to the bank reveal that Société Générale has enlisted the services of investment bank Lazard to seek potential buyers for its operations in Ghana, Cameroon, and Tunisia. It’s been hinted that Absa Bank is seriously considering the acquisition of these subsidiaries.

Weeks ago, Société Générale finalized agreements with Saham Group to sell its Moroccan operations. Last year, it divested its interests in several African countries, including Congo, Equatorial Guinea, Mauritania, Burkina Faso, and Chad.

Société Générale initially entered the Ghanaian market in 2003 by acquiring a 51% stake in the then Social Security Bank. Despite the challenges faced by the financial sector, the bank asserted its resilience during its 20th-anniversary celebration last year.

The Société Générale group, with its longstanding presence in Africa, intends to concentrate its resources on markets where it can establish itself as a leading bank, in alignment with the group’s overall strategy, as stated on its website on April 12, 2024.

European Banks Exiting Africa
Société Générale’s planned exit from Ghana and other African countries mirrors similar actions taken by other European banks. Notable names include Barclays and Standard Chartered, with the latter withdrawing from some countries while maintaining operations in Ghana and a few other African countries.

Additionally, newer entrants like Atlas Mara have also left the continent while Credit Suisse is retaining only its South African operation. French bank Groupe BPCE exited its non-core businesses in several African countries as far back as 2018.

Possible Reasons
The departure of European banks from Africa, including Société Générale, is primarily attributed to the high cost-to-income ratio. These banks are facing reduced returns on their investments in Africa compared to decades ago. The banking landscape has evolved, requiring significant investments in IT infrastructure and compliance to meet regulatory requirements set by central banks. Many African central banks have also increased minimum capital requirements over time.

Furthermore, increased competition in the sector combined with stagnant economic growth in many African countries has further squeezed profit margins. The exit of European and other non-African banks suggests that African banks, particularly from South Africa and Nigeria, may emerge as dominant players in the continent’s banking sector.