Sub-Saharan African investment banking has been hit by a dearth of deals so far this year, with fees totaling $71.9 million in the first quarter, down a whopping 60 percent from the same period last year.
JPMorgan Chase & Co (JPM.N) is pushing transaction banking in Africa and plans to add 50 new staff in Nigeria over the next five years, as it targets growing demand for trade finance from African firms, its head for the region said on Thursday.
John Coulter, JPMorgan's senior country officer for sub-Saharan Africa, also told the Reuters Africa Investment Summit the U.S. bank was aiming to roll out a full branch in Nigeria, with local currency capabilities, by the end of 2013.
While some international lenders have attempted to crack the African market by pushing investment banking, Coulter said there was still limited demand for such services, given the emerging state of local capital markets.
"A strategy that focuses on Africa from a pure investment banking perspective, for JPMorgan, is not the approach to follow. We have got the capital and the capability as a bank to extract more from an African wallet," he said in an interview at Reuters offices in Johannesburg.
"A company in Kenya or a bank in Ghana needs trade finance lines, credit lines to help them grow their business, project finance, infrastructure support and the corresponding banking lines."
As part of that focus, JP Morgan plans to expand its presence in Nigeria to 60 people over the next five years from 10 now, he said.
The bank is also in discussions with the central banks in both Kenya and Ghana to open representative offices in those countries, he said.
A graduate of Trinity College Dublin and a veteran Africa banker, Coulter first told Reuters last year that JPMorgan was eyeing expansion in Nigeria, Ghana and Kenya.
Global banks are increasingly looking to tap into Africa's strong GDP growth and its growing trade corridor with Asia. But there is plenty of competition, especially from regional players such as South Africa's Standard Bank (SBKJ.J).
Standard Chartered (STAN.L) aims to double its African revenues to $2.5 billion in the next five years, its head of Europe, the Middle East and Africa told the Summit on Wednesday.
JPMorgan did not feature in the top ten for sub-Saharan investment banking fees for the first quarter of 2012, according to Thomson Reuters league tables. It was in the No.4 position in the first quarter of last year.Sub-Saharan African investment banking has been hit by a dearth of deals so far this year, with fees totaling $71.9 million in the first quarter, down a whopping 60 percent from the same period last year.
Many African corporations still don't require the investment banking services demanded by multinational counterparts, Coulter said.
"On a regular basis, they probably do not require M&A advice and access to the international capital markets to raise equity," he said.