South Africa’s Standard Bank has reported a 121% increase in the number of offshore accounts opened since June 2023, according to a statement seen by a local outlet.
According to bank officials, clients are seeking to diversify their assets across borders to protect themselves from unforeseen events and uncertainty.
“With domestic events like local elections, the energy crisis, and general economic uncertainty, we have noted an increase in enquiries over the past three years,” says Bridgette Kruger, Head of Private Banking clients at Standard Bank.
“However, we generally find that clients wish to diversify across borders to protect themselves from unforeseen events and uncertainty by placing some of their wealth offshore.”
Kruger adds that clients also want exposure to international markets and a hedge against fluctuations in local currency.
The rise in offshore limits under Regulation 28 of the Pension Funds Act in 2022 has also allowed South Africans more opportunities to diversify internationally. Retirement funds can now invest 45% of their members’ money outside of South Africa, up from the previous limit of 30%.
“It is possible that this increased offshore exposure makes people see a need to open offshore bank accounts,” says Kruger.
Additional reasons for opening offshore accounts include travel where clients prefer to save in hard currency to avoid exchange rate fluctuations, aspirations to retire overseas, children studying abroad, and geopolitical risks that necessitate offshore exposure to safeguard investments.
South Africa’s Standard Bank Group ranked as the leading bank in Africa, according to the level of tier 1 capital, which consists of core capital, reserves, retained earnings, and minority interests. With operations in 20 countries in the continent, the bank group registered a capital of $13.2 billion U.S. dollars as of the end of 2022.
The National Bank of Egypt followed, with 7.3 billion U.S. dollars in tier 1 capital as of June 2021.
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