COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 66/LM/Oct10
In the matter between:
Standard Bank Group Limited Acquiring Firm
And
Credit Suisse Standard Securities (Pty) Ltd Target Firm
Panel : Norman Manoim (Presiding Member),
Yasmin Carrim (Tribunal Member), and
Andreas Wessels (Tribunal Member)
Heard on : 24 November 2010
Order issued on : 24 November 2010
Reasons issued on : 15 December 2010
Reasons for Decision
Approval
1] On 24 November 2010, the Tribunal unconditionally approved the
acquisition of Credit Suisse Standard Securities (Pty) Ltd (“CSSS”) by
Standard Bank Group (“SBG”). The reasons for approving the transaction
follow.
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The parties and their activities
2] The primary acquiring firm is Standard Bank Group (“Standard Bank”), a
public company listed on the Johannesburg Stock Exchange. SBG has
control over 6 entities. 1 Standard Bank is a financial services group that
provides a diverse range of retail and commercial banking and other
financial services. These services include personal and business banking,
corporate and investment banking, and wealth services and activities.
3] Standard Bank also owns a separate stock broking entity, Standard
Financial Markets (Pty) Ltd (“SFM”) which operates in the retail stock
brokerage and derivative trade markets.
4] The primary target firm is Credit Suisse Standard securities (Pty) Ltd
(CSSS”). CSSS is a joint venture operation between Standard Bank of
South Africa Limited (“SBSA”) and Credit Suisse (International) Holding
AG (“Credit Suisse”). Each of these parties hold a 50% interest of the
issued ordinary share capital in CSSS.
5] CSSS is an institutional stock brokerage business. It provides services
that include equity sales, equity trading, equity research, finance and
administration and corporate broking services.
The proposed transaction and Rationale
6] Standard Bank is to acquire 50% shareholding in Credit Suisse Standard
Securities (“CSSS”). Standard Bank will effectively hold 100%
shareholding in CSSS, directly and through its wholly owned subsidiary
SBSA.
7] Credit Suisse and Standard Bank have decided to end the joint venture
after four successful years. During these four years the joint venture has
1 Namely Standard Bank of South Africa Limited (“SBSA”), Stanbic Africa Holdings Limited,
Standard International Holdings Limited, Liberty Holdings Limited, Standard Bank Group
International Limited, Stand Bank Offshore Group.
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grown significantly and has achieved a consistent Top 2 ranking among
broking members of the securities exchange operated by the JSE Limited.
8] Standard Bank will rebrand and rename Credit Suisse Standard
Securities to Standard Securities. Standard Bank will focus on further
developing its institutional stock broking capabilities in key emerging
markets. Standard Bank’s equity derivative and capital markets
businesses will be aligned with Standard Securities to deliver an
integrated offering to both its domestic and international client base.
9] Credit Suisse will develop a wholly-owned integrated equities business
and operate this business as Credit Suisse Johannesburg.
Relevant markets and impact on competition
10] The relevant market is the provision of equity sales, equity trading, equity
research, finance and administration and corporate broking services.
11] CSSS’s market share is expected to fall as 50% of the revenue generated
was attributed to foreign investors trading equities on the exchange
operated by the JSE. This is because majority of these foreign institutional
investors are clients of Credit Suisse and not CSSS directly. These
investors will continue to transact through Credit Suisse and its newly
established licensed stock broker Credit Suisse Johannesburg.
12] Standard Bank Financial Markets, which is owned by Standard Bank
Group, has approximately 2.06% market share and operates in the retail
stock beverage market. Standard Bank Financial Markets does not
operate in the same market or compete with CSSS which operates in the
institutional stock brokerage market. CSSS has a market share of
approximately 8.86% and has other effective competitors in the market.2
2 Such as Duetshce Securities, UBS Securities SA, ABSA Stockbrokers, Merrill Lynch SA, and others
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13] There are no overlaps between the activities of the merging parties.
Public interest
14] No public interest concerns arise as a result of this proposed transaction.
Conclusion
15] The proposed transaction is unlikely to substantially prevent or lessen
competition in any market. No significant public interest issues arise as a
result of this transaction. We accordingly approve the transaction.
____________________ 15 December 2010
Yasmin Carrim DATE
Norman Manoim and Andreas Wessels concurring.
Tribunal Researcher : Mahashane Shabangu
For the Merging parties : Natalie von Ey of Cliffe Dekker Hofmeyr Inc
For the Commission : Lerato Monareng of the Mergers and
Acquisitions Division
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