Major international banks are exiting South Africa
International banks are retreating from Africa and South Africa because the domestic financial sector and new digital challengers dominate, according to a new report by Moody’s.
The credit rating agency noted that global lenders have consistently struggled to break into the country’s retail banking market, where entrenched local players and fintech start-ups have already secured strong footholds.
This imbalance has contributed to a string of high-profile exits, most recently the winding down of HSBC’s operations.
In September 2025, the South African Reserve Bank (SARB) gazetted the official closure of HSBC Private Bank in South Africa, effective 1 September.
The move followed the group’s earlier decision to withdraw its broader banking presence from the country, bringing to an end 30 years of operations.
HSBC first entered South Africa in 1995, but in September 2024, it announced that it would be closing its operations. Its exit is being phased, with operations scheduled to conclude by 31 October 2025.
As part of the exit, HSBC’s South African client base is being transferred to FirstRand’s corporate and investment arm, Rand Merchant Bank (RMB), after receiving regulatory approval in June 2025.
HSBC’s departure is not an isolated case. It is one of five major international finance groups that have either closed their operations or scaled back in South Africa over the last two years.
BNP Paribas shut down its corporate and investment banking business in May 2024. Additionally, Barclays and Standard Chartered have significantly reduced their presence across Africa.
Moody’s said that structural challenges across the continent have limited the ability of international banks to grow sustainably.
A major obstacle is the absence of standardised national identity systems in many countries, which complicates compliance with strict “know your customer” requirements.
As a result, foreign lenders tend to focus on serving large corporates and high-net-worth clients in urban centres, leaving vast segments of the population untouched.
Hasn’t stopped new entrants
In contrast, domestic banks and fintech companies are finding success by tailoring products to local needs.
Moody’s highlighted how African lenders are using mobile technology, agent networks, and alternative data to expand financial access to informal businesses, rural populations, and young adults.
This bottom-up approach has allowed them to capture fast-growing segments of the market that international banks often overlook.
The report also pointed out that Africa’s economic potential remains significant, with rapid demographic growth, a youthful and urbanising middle class, and relatively low levels of financial inclusion.
However, Moody’s cautioned that the continent’s fragmented geography and underdeveloped infrastructure continue to pose barriers to integration. It noted that the lack of reliable road, rail, and air transport systems slows trade and financial connectivity.
For local banks able to scale, these challenges also create opportunities. Financing infrastructure is becoming a key area of growth, with South Africa’s Standard Bank emerging as a leading player.
The bank has backed major renewable energy and transport projects across the region, including the Ummbila Emoyeni and Ishwati wind farms in South Africa and the Diaz Wind Project in Namibia.
According to Moody’s, such investments are crucial for facilitating trade, enhancing mobility, and promoting cross-border development.
Despite the exit of established names, the South African market is still drawing new entrants. London-based digital bank Revolut recently announced plans to apply for a full banking licence in the country, its first move into Africa.
Revolut South Africa CEO Jacques Meyer said the company believes the market is “primed for disruption” and that there is strong demand for innovation in banking services.
Meyer explained that securing a licence will enable Revolut to offer a full suite of banking products, rather than operating only as an app-based service.
The move pits Revolut against homegrown digital challengers such as TymeBank, Discovery Bank, and Bank Zero, all of which have been steadily expanding.
Revolut’s application also forms part of its global growth strategy, which has included securing a payments licence in the United Arab Emirates earlier this year and exploring acquisitions in the United States.
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