Bloomberg News

BNP Faces South Africa Regulatory Delay on Crisis Concern

September 21, 2011

(Updates with closing share price in fourth paragraph.)

Sept. 21 (Bloomberg) -- BNP Paribas SA’s application for a South African banking license has been delayed by regulators in Africa’s biggest economy, who are assessing the fallout from Europe’s debt crisis on the French lender.

“The assessment process is taking longer as a result of the global uncertainty,” Michael Blackbeard, who became the acting regulator of South African banks in August, said in an e- mailed response to questions. “We are in the process of carefully assessing each application, especially in light of the financial crisis and uncertain developments in Europe.”

BNP Paribas, France’s largest bank, met with South Africa’s banking regulator in February to exchange information about operating in the country. To obtain a license in South Africa, the Paris-based lender needs to provide as much as 250 million rand ($33 million) in capital, or 10 percent of its risk- weighted assets, whichever is higher, Errol Kruger, the previous banking regulator, said in February.

Shares in BNP fell 1.9 percent to 24.46 euros in Paris. European banks are among the worst-performing shares in Europe this year because of their holdings of Greek debt.

Italy’s credit rating was cut by Standard & Poor’s on Sept. 19, the country’s first downgrade in five years, as Greece’s worsening crisis fans concern that contagion will engulf other countries.

More Applicants

The Stoxx 600 Banks Index has dropped 35 percent in the last year, compared with an 18 percent decline in the broader Stoxx Europe 600 Index. South Africa’s FTSE/JSE Africa Banks Index has fallen 3.7 percent.

The South African central bank has received applications from other foreign lenders, according to Blackbeard, who declined to provide their names.

Paris-based BNP spokesman Pascal Henisse declined to comment on the South African application process.

With growth in many African nations forecast to outstrip that in developed countries, banks are vying for market share and profit as the continent’s population tops 1 billion.

BNP Paribas agreed on Aug. 4 to buy a 60 percent stake in Cadiz Holdings Ltd.’s securities unit for 150 million rand to gain a foothold in South Africa. The two companies hope to complete the transaction before the end of the year.

--Editors: Stephen Taylor, Keith Campbell.

To contact the reporters on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net; Renee Bonorchis in Johannesburg at rbonorchis@bloomberg.net

To contact the editors responsible for this story: Edward Evans at eevans3@bloomberg.net


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