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Small banking shareholders in Angola may have to leave, says economist

The chief economist of the consultancy Eaglestone Securities considered on Saturday that the disclosure of the 'Luanda Leaks' scandal, the challenging economic context and regulatory oversight in Angola may force shareholders linked to the previous government to leave the banking sector.

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"It is a possible scenario that they sell their shares, there are several shareholders with small shares and in the current context, quite challenging in economic terms, and with a tendency of greater competition in the sector and greater regulatory demand from the central bank, there may be shareholders who need to sell their shares," said Tiago Dionísio, when asked about the implications for banking of the disclosure of documents known as 'Luanda Leaks'.

In an interview with Lusa, the analyst stressed that "the scenario in the Angolan banking sector can change a lot," but added that "it will still take some time" before the consolidation of this sector, marked by the pulverization of small banks, becomes a reality.

The country "has a very particular shareholder structure in the international context," he stressed, recalling that there are banks with dozens of small shareholders and that there are almost 30 banking entities operating in the country.

"2020 may finally be the year in which we see some consolidation in the banking sector", the analyst argued, saying that "the regulatory requirement and the increasingly competitive economic and banking environment means that some of the smaller banks will have greater difficulties in operating in the current climate", and for this reason we may see "a scenario of concentration or mergers" in banking in Angola.

Asked which banks are best suited to a merger or concentration, chief economist Eaglestone Securities responded: "If we take into account the shareholder situation of Banco Económico (BE) and Banco de Fomento Angola (BFA), where in the former Sonangol has 70 per cent, and in the latter 50 per cent for having bought Oi's stake in Unitel, the national oil company has more and more power in this bank, and it could be an interesting scenario in the banking sector to have a large bank, and a merger between BFA and BE is a scenario to which we will be attentive in the coming months".

On whether this is just a scenario or whether there are already concrete moves, Tiago Dionísio replied: "It could happen, Angola has 4 or 5 large banks and it makes sense to have one or two large banks in the African and sub-Saharan African context".

Tiago Dionísio pointed out that the country, despite being the second largest oil producer in the region and the third largest economy, "does not have a bank that stands out and there may be a merger between the biggest 'players', for example in these two that have Sonangol as a reference shareholder," or between BPC, which faces difficulties, and the Angolan Investment Bank, "which could absorb one or another smaller to gain size.

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