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BNP Paribas, which one of the biggest banks in the world, has decided to stop operating as a bank in South Africa.

Bye Bye BNP Paribas

This French bank, which handles about R8.2 trillion in assets, had run a branch in South Africa since 2012 (offering services for businesses and investments) but has made the decision to pull out of the country.

This is because BNP Paribas say they now want to focus more on Europe and Asia, so it decided to pull back from Africa as a whole, not just SA.

French-owned banks in general often have stricter lending rules and a lower risk appetite. This means that they are not as eager as others to put their funds at risk lending to those who might not repay. Theya re also more sensitive to possible political and social risks.

On March 8, 2024, the South African Reserve Bank officially ended BNP Paribas’s banking license. But even though BNP Paribas will no longer operate as a bank in South Africa, it still owns RCS who are well known.

Changes in Investor Interest

It seems that some big international companies are reconsidering their investments in South Africa. For example, Shell has announced that it is planning to sell its 72% stake in its South African operations, and BHP’s recent offer to buy Anglo American didn’t include the South African assets.

‘This doesn’t mean that everyone is avoiding investing locally’

This doesn’t mean that everyone is avoiding investing locally. Recent stats show that many foreign companies are still investing locally. But SA’s perceived changing political alignment with some countries and new closer links with more BRICS members is having an effect.

The Upside for Local Banks

The exit of BNP Paribas means less competition for local banks.

This is good given the sudden influx of digital banks coming. Several new banks are on the horizon locally.

Read more: 4 new banks for SA?

So, this means that the existing local banks can potentially swoop up a few more clients so long.