South Africa's Standard Bank sells stake in Argentinian firm

'Argentina remains off-strategy for the group as a geography,' the commercial bank said.

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

The Argentinian financial services group in question is ICBC Argentina.

“ICBCA has performed strongly since the change of control from a financial perspective. However, Argentina remains off strategy for the group as a geography and there is little overlap in the client bases of Standard Bank Group and ICBCA,” Standard Bank said in a statement.

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

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 percent shareholding.

Collectively, ICBCA is made up of: Industrial and Commercial Bank of China (Argentina), previously Standard Bank Argentina, ICBC Investments Argentina Sociedad Gerente de Fondos Comunes de Inversión (previously Standard Investments S.A. Sociedad Gerente de Fondos Comunes de Inversión) and Inversora Diagonal.

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 $180.8 million (about R2.7 billion).

The Argentinian investment had a net asset value of R1.6 billion on Standard Bank’s books at the end of June, and contributed R432 million 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 R600 million, 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 percent, from a previous estimate of 31.9 percent.