French bank Société Générale exiting Ghana market

French banking giant Société Générale has decided to exit the Ghanaian market after just two decades since it entered into the country.

The bank has also opted to cease operations in two other African nations, namely Tunisia and Cameroon.

Insiders familiar with the matter reveal that Société Générale has engaged the services of investment bank Lazard to explore potential buyers for its assets in Ghana, Cameroon, and Tunisia. There are indications that Absa Bank is actively considering the acquisition of these subsidiaries.

Recently, Société Générale finalized deals with Saham Group to offload its Moroccan operations. In the previous year, it divested its interests in various African nations, including Congo, Equatorial Guinea, Mauritania, Burkina Faso, and Chad.

With its longstanding presence in Africa, the Société Générale group aims to focus its resources on markets where it can establish itself as a leading bank, aligning with its overarching strategic objectives, as outlined on its website on April 12, 2024.

Société Générale's decision to withdraw from Ghana and other African countries mirrors similar moves made by other European banks, notable examples include Barclays and Standard Chartered, with the latter exiting from certain countries while maintaining operations in Ghana and a select few other African nations.

Moreover, newer players like Atlas Mara have also exited the continent, while Credit Suisse has opted to retain only its South African operation.

The exit of European and other non-African banks suggests that African banks, particularly those from South Africa and Nigeria, may emerge as dominant players in the continent's banking landscape.

French bank Groupe BPCE began divesting its non-core businesses in several African countries as early as 2018.

The departure of European banks, including Société Générale, can be largely attributed to the high cost-to-income ratio. These institutions are encountering diminished returns on their African investments compared to previous decades.

The evolving banking landscape necessitates substantial investments in IT infrastructure and compliance to meet stringent regulatory standards set by central banks.

Many African central banks have raised minimum capital requirements over time, further complicating the operating environment for foreign banks. Additionally, heightened competition in the sector coupled with stagnant economic growth in numerous African nations has placed pressure on profit margins.