Goldman Sachs Plots South Africa Banking Expansion

Goldman Sachs is seeking a banking licence in South Africa, as part of an expansion of its business in Africa’s most industrial nation.

The Wall Street bank said on Wednesday that it will sell more core banking products such as fixed income to clients in South Africa, in what it called a “vote of confidence” in the ability of President Cyril Ramaphosa to carry out difficult economic reforms.

Goldman has sold advisory and wealth management services in South Africa for several years. “We see tremendous opportunity to better serve local and global clients investing in South Africa and the wider region,” Richard Gnodde, chief executive of Goldman Sachs International, said.

The bank is in the process of applying for the South African licence, people familiar with the application said.

Goldman has also entered into a deal with Investec, the South African investment bank, to expand equity trading in the region.

The New York-based bank is battling a slump in core trading revenue and is seeking to tap new markets, such as investing in retail banking. It is also applying for a banking licence in Japan in order to offer global cash management services.

Goldman has also been one of the most bullish global banks on Mr Ramaphosa’s ability to revive an economy that fell into stagnation under his predecessor, Jacob Zuma.

Mr Ramaphosa, a trade unionist turned tycoon, unseated Mr Zuma after a power struggle in the ruling African National Congress (ANC) last year. His promise to root out corruption has been widely credited with preventing an even steeper decline in the ANC’s support than it experienced in an election last week.

The ANC was re-elected with less than 58 per cent of the vote, its lowest majority since it first won power in 1994.

Mr Ramaphosa has pledged to remove corrupt officials from state positions and to overhaul the blackout-prone state power monopoly Eskom. Both are substantial blocks on investment.

But he faces resistance from old allies of Mr Zuma in the ANC and the economy is saddled with deep structural problems such as a jobless rate of more than 27 per cent.

Goldman’s sub-Saharan Africa head, Colin Coleman, has been a high-profile business supporter of the president.

The expansion of the firm’s product line “is a vote of confidence by Goldman Sachs in the future of South Africa, and the region as a whole,” Mr Coleman said.

“It is testament to our confidence in the unfolding structural reforms in South Africa, which should drive higher economic growth rates and economic opportunity for our clients and the people of the region,” he added.

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