Goldman Sachs Is Expanding In South Africa, Opening A Bank And Listed On The Johannesburg Stock Exchange

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Written by Peter Pedroncelli
Goldman Sachs
Goldman Sachs is expanding its services in South Africa with plans to open a bank in the country while it is now listed on the currency markets of the JSE. A screen at a trading post on the NY Stock Exchange floor is pictured Oct. 16, 2014. Image: AP Photo/Richard Drew, File

While some large international financial firms are leaving South Africa, U.S. investment bank Goldman Sachs is doubling down and expanding its services with plans to open a bank in the country.

Global financial players Deutsche Bank, Credit Suisse, Australian Macquarie Group, and Dubai’s Arqaa, are reducing staff or pulling out of the country altogether in response to a sluggish economy and consistently high unemployment, according to BusinessInsider.

Goldman Sachs is not following the same strategy, however. The Wall Street firm has applied for and received a banking licence to operate as a bank in South Africa.

The Wall Street firm has also become a member of the Johannesburg Stock Exchange’s interest-rate and currency-derivatives market, the company said in a statement on Jan. 20.

The expansion means that Goldman Sachs will be able to offer full investment banking services including loans to South African corporations and institutions, government and public company bonds, equities, and currencies, Businesstech reports.

Goldman’s 20-year history in South Africa has been limited to providing advice on wealth and asset management, as well as support in mergers and acquisitions.

The firm’s Johannesburg-based team has appointed two new investment co-heads

Jonathan Penkin, who has been with Goldman Sachs since 2006 and previously worked as chairman of equity capital markets for Asia based in London, is the new head of its sub-Saharan African operation starting in December. He has relocated to Johannesburg.

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“Some players have said that South Africa is not what it used to be. Goldman Sachs is saying, on the contrary, it would strengthen its position in Africa,”  said Benjamin Ngongang, associate director of FinAfrique, a banking and insurance consulting firm based in Abidjan, Douala, and Paris, according to TheAfricaReport.

Despite weak growth, South Africa has the biggest, most liquid and most sophisticated capital markets in Africa.

The Johannesburg Stock Exchange is Africa’s most liquid stock exchange where more than $1.4bn is traded daily, Crown reports.