Fitch Solution, an international rating agency, says French banks exit from Africa will create more opportunities for local banks.
The rating agency said their exit could potentially spur growth and competition for local banks.
This forecast comes against the backdrop of the Societe Generale (SG) decision to withdraw from the Ghanaian banking market and two other countries, notably Tunisia and Cameroon.
The rating agency said the challenges of French-owned banks in the African banking market had occasioned their exit, including their inability to target certain segments of the economy due to their parent bank’s conservative risk appetite.
Fitch also said French-owned banks followed more stringent loan classification and provisioning policies than locally owned banks, and this can act as a drag on growth and profitability.
The rating agency noted that stricter capital management, with higher buffers over local minimum regulatory requirements, has also constrained French-owned banks ability to lend in the African market.
Fitch noted that French banks’ exit from African retail and commercial banking is slightly credit-positive for them.
In the past six months, SG has also agreed to sell off some other smaller African subsidiaries and launch a strategic review to dispose of its fifty-two-point-three four per cent stake in Tunisia-based Union Internationale de Banques.
Source: GNA
