South African bank up for sale – as 4 more get ready to launch

Bidvest announced that it will be exiting its banking business at the start of the month, with questions being raised about who will be the likely buyer.
Bidvest announced on 3 July that it will be restructuring its financial services division, which includes putting Bidvest Bank and FinGlobal up for sale.
The “strategic restructuring” will impact Bidvest Financial Services division, which provides banking and related products and services to South African corporates, businesses and consumers.
In subsequent engagements, the group specified that it would be looking for a buyer who could ensure business continuity and, importantly, lessen the impact on the segment’s 1,500 employees.
Some have posited that the best potential fit is African Bank—which acquired Grindrod Bank in 2022 and penned an R3.3 billion acquisition deal with Sasfin Bank in 2023.
Potential also exists outside the banking sector, with other possible avenues being with telcos or retail groups that are looking to buff their financial services offerings.
However, speculators will have to wait until official bids are made, with Bidvest management looking to identify a suitable acquirer by the end of 2024.
Bidvest is disposing of its finance division to focus more on growing in niche services such as hygiene, facilities management, plumbing and related product distribution.
The bank has been performing strongly post-Covid, the group said.
In FY2023, Bidvest Bank generated trading profit and operating income of R234 million and R219 million, respectively.
The Bidvest Bank book, which consists mainly of leased assets, loans and advances, totalled R5 billion funded by deposits of R8 billion.
The Banker’s latest ranking of the top 1000 banks in the world shows that South Africa’s banking sector is performing very well in local currency terms, with all major banks posting “solid financial results”, despite the country’s low GDP growth.
Other banks are coming
Even as Bidvest looks to exit the banking businesses, there are at least four other banking groups that will be entering the highly competitive market in the coming months and years.
The Young Women in Business Network (YWBN) received its mutual banking licence at the start of the year, allowing it to push forward to a full launch for the group, likely in 2025 or beyond.
Mutual banks are ultimately owned by their depositors, who in turn become shareholders and can have a say in the bank’s operations. YWBN would be playing in the same space as Bank Zero Mutual Bank and Finbond Mutual Bank.
VBS Mutual Bank was also a prominent player in the sector before being liquidated due to the widespread corruption and looting of its depositors’ money.
In the more mainline banking sector, financial group Old Mutual is in the process of launching its own full-service bank, which will compete with the established retail banks in the country. At last reporting, it is expected to launch sometime in 2024, having received its licence in April.
The bank is looking to take on Capitec on its home turf in the mass market segments, focusing on low-income and lower-middle-income individuals, who typically earn between R1,000 and R30,000 per month.
There are also two state-owned banking ventures on the way.
Postbank cleared several hurdles on its path to becoming a fully-fledged banking operation this year, splitting from the South African Post Office and forging its own path forward.
Finally, the Department of Women, Youth and Persons with Disabilities (DWYPD) told parliament in March that it is making progress on its plan to create a new cooperative bank in South Africa.
Like YWBN before it got its mutual banking licence, the government bank, which has the proposed name of the SA Innovative Financial Services Cooperative (SAIFSC), will be more akin to a formalised stokvel than a mutual or commercialised bank.
Cooperative banks are more conservative in nature and invest the members’ money into secure funding and government bonds instead of riskier stock exchanges.
They also differ from mutual banks as they operate under a common bond, either as a group of people that work together or belong to a particular association or a specific geographical area.
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