Assessing the strategic alliance between Industrial and Commercial Bank of China and Standard Bank

Abstract

Many financial experts, scholars and politicians around the world took notice in 2007, when the Industrial and Commercial Bank of China (ICBC), the world largest bank by market capitalization, announced that it would invest US$5.6 billion to acquire a 20% stake in the South African Standard Bank (SBSA). After all, SBSA is Africa‟s top bank by assets with a continent-wide footprint. At the same time, the announcement of the deal set off an avalanche of assumptions that this deal “fits nicely” into China‟s “go global” strategy and was therefore mainly initiated by the Chinese government. Moreover, it was assumed that the alliance underpins a new shift of China‟s engagement from a resource-seeking strategy to a more knowledge-seeking and strategic-asset-seeking strategy in Africa, and that more Chinese banks would follow ICBC‟s example, thereby considerably impacting Sino-African relationships in the long run. Four years after the announcement of the deal, this study intends to evaluate these before-mentioned assumptions. Therefore, it investigates the general reasons and motivations for Chinese banks to enter to the South African banking sector. Within this context, the strategic alliance between ICBC and SBSA is used as a case study, which is studied against the above mentioned broader context to gain a better understanding for the Chinese engagement in the South African banking sector and its importance for the Sino–African relationship in the long run. The research is based on the analysis of public documents, reports and theoretical papers as well as valuable insights from 13 interviews, which were conducted during August and September 2011 in Cape Town, Johannesburg and Pretoria with key representatives from the South African and Chinese banking industry, the South African financial sector regulatory body, the South African government, scholars, financial experts as well as the private sector.2 The interviews were mainly conducted as semistructured, mostly (11 out of 13) face-to-face interviews and some (2 out of 13) via telephone.