By Jorn Madslien BBC News Online business reporter

Can Standard Chartered get South Africans to use internet banking?

The bank, which pulled out in 1987 during the Apartheid years, earlier this week bought the internet bank 20twenty.

The bank initially returned to South Africa in 1992, but only now is it seriously targeting retail customers.

"This is exactly the right time [to return]," Standard Chartered's chief executive in Africa, Peter Sullivan, told BBC World Business Report.

Others appear to agree.

Last month, Standard Chartered's main competitor in Africa, Barclays Bank, moved the regional headquarters of its African business from London to Johannesburg.

"The political environment is very stable, the economic environment is being very strong. The government's fiscal policy is very good," said Mr Sullivan.

Strong economy

Indeed economists agree that South Africa's prospects look good.

Barclays Capital predicts that the economy will grow by 2.1% in 2003, then "stage a sharper recovery in 2004 to 3.0% year-on-year growth".

Analysts predict a series of aggressive interest rate cuts this year and next, moves that should bolster the performance of South African companies.

Shares should rise too, analysts suggest, despite the strength of the country's currency, the rand.

And this should help encourage a rise in investments and consumer spending, fuelling further growth.

Tough market

But a strong economy and a recently obtained banking licence may not be enough to ensure that Standard Chartered succeeds in South Africa.

Mr Sullivan believes this is a good time to target South Africa

Barclays, for example, has decided to focus on the corporate and private banking market for now, leaving retail banking for later.

The market is heavily dominated by four major banks, and Mr Sullivan has no illusions about their resistance to its market entry.

"This is a very well developed banking market," he said.

"It's highly sophisticated even by international standards, not only by African standards."

However, regardless of the sector's degree of sophistication, it is also a troubled part of the economy.

About 36,000 jobs were lost in the country's banking, insurance and real estate sectors during May, June and July, according to Statistics South Africa.

Online banking

For Standard Chartered, such issues could prove deeply problematic, not least since its South African retail subsidiary 20twenty is a purely online bank.

This means the bank has to both beat off established players and convince customers that internet banking is safe.

South African customers are extraordinarily wary about banking online, following the recent revelation that a hacker stole large sums of money.

The hacker had used spy software to peek into people's computers in order to find out their account details and pin numbers.

The four major banks, as well as Investec, are already working hard to tackle this problem.

But the difference between them and 20twenty is that their businesses do not rely solely on the web.

Reaching customers

So in order to get greater access to customers, Mr Sullivan said he would even consider launching 20twenty branches in the high street as part of the bank's efforts to eat into the majors' market share.

Standard Chartered has already obtained a licence to open a branch, though another possible route forward would be for the bank to develop links with ordinary retailing chains.

Some of the established banks have done so already under the country's finance sector black empowerment charter which was introduced recently.

The banking group Nedcor, for example, has established links with the furniture retailing chain JD Group and the food retailer Pick'n Pay.

Pan-African expansion

Standard Chartered hopes its strength across Africa should put it in a strong position in South Africa too.

The bank is, together with Barclays and Citigroup of the US, a leading player in Africa.

But while Standard Chartered is now entering South Africa, the South African banks themselves are also expanding.

The big four have begun challenging Standard Chartered in its traditionally strong markets across the continent.