According to a statement obtained by a local station, Standard Bank of South Africa has claimed a 121% increase in the number of offshore accounts created since June 2023. Bank executives claim that customers are looking to diversify their assets internationally in order to hedge against uncertain and unanticipated circumstances.

“We have noticed an increase in inquiries over the past three years due to domestic events like local elections, the energy crisis, and general economic uncertainty,” says Standard Bank’s Head of Private Banking Clients Bridgette Kruger. However, we typically discover that clients want to diversify internationally by putting a portion of their capital abroad in order to shield themselves against unanticipated occurrences and uncertainty.

According to Kruger, clients also desire a buffer against local currency volatility and exposure to global markets. Additionally, Regulation 28 of the Pension Funds Act has increased offshore restrictions for 2022, giving South Africans greater options to diversify abroad. Retirement funds are now allowed to invest up to 45% of the money of their members outside of South Africa, as opposed to the prior 30% cap.

According to Kruger, “it’s possible that people feel compelled to open offshore bank accounts as a result of this increased offshore exposure.”

Aside from tourism, clients create offshore accounts for a variety of reasons, such as retirement planning, children studying abroad, geopolitical concerns requiring offshore exposure to protect investments, and vacations when clients choose to save in hard currency to minimize exchange rate volatility. Based on tier 1 capital (core capital, reserves, retained earnings, and minority interests), Standard Bank Group of South Africa was the top bank in the continent. The bank group, which operates in 20 countries throughout the continent, reported having $13.2 billion in capital as of the end of 2022.

The National Bank of Egypt came next, having tier 1 capital of 7.3 billion dollars as of June 2021.