- Standard Bank Group has raised ZAR 2 billion (about USD 123.76 million or KES 16.16 billion) through new safety-buffer bonds.
- The offer drew bids worth over ZAR 10 billion from more than 30 large investors.
- The bonds, known as Flac notes, are part of South Africa’s new banking rules introduced in 2023.
- The funds help protect depositors and reduce the need for taxpayer bailouts during financial trouble.
Standard Bank Group, the parent company of Stanbic Kenya, has successfully raised ZAR 2 billion through a new type of bond designed to strengthen banks during financial stress. The amount is equal to roughly USD 123.76 million or KES 16.16 billion.
The deal is the first of its kind in Africa and marks a major shift in how banks on the continent can protect themselves in times of crisis.
Interest in the bond sale was high. The bank received offers worth more than ZAR 10 billion from over 30 institutional investors.
According to a statement from Standard Bank, the transaction was divided into four parts to meet investor demand. The large response shows that fund managers are keen on new tools that support stability in the banking sector while limiting pressure on public funds.
The bonds issued are known as Financial Loss-Absorbing Capacity notes, or Flac notes. They fall under South Africa’s updated banking rules that began in 2023.
These rules allow regulators to step in and manage troubled banks without relying on government bailouts. If a bank faces serious financial problems, the notes can either be reduced in value or turned into shares. This process helps rebuild the bank’s capital and limits risk to the wider economy.
Paul Burgoyne, Head of Treasury and Money Market at Standard Bank, said the successful issuance followed years of legal and regulatory groundwork. He added that the bank also held wide discussions with major investors before launching the bond.
The move places South Africa in line with global banking standards such as the Total Loss-Absorbing Capacity (TLAC) framework supported by the Financial Stability Board. These global rules aim to ensure investors and shareholders carry losses first when banks face difficulties.
Ratings agency Moody’s has described South Africa’s new resolution system as positive for senior lenders and deposit holders. The agency noted that due to limited public funds, authorities are unlikely to rescue banks using taxpayer money.
Instead, under the new structure, junior creditors and Flac bond holders would absorb losses if a bank collapses. This approach helps protect public finances and strengthens confidence in the system.
The bond sale is seen as a key step in the growth of Africa’s financial markets. By introducing Flac notes, Standard Bank has opened the door for similar transactions across the region.
For investors, the new instruments offer another option in the market. For regulators, they provide a stronger safety net. And for taxpayers, they reduce the risk of footing the bill in times of banking crisis.
