Small businesses lobby group the National African Federated Chamber of Commerce (Nafcoc) appears to be the frontrunner in the race for Mercantile Bank, which was put on sale last week. Observers say the buy would be a good fit for the companies as Mercantile specialises in loans for small businesses.
The “for sale” sign could also be an opportunity for the government to make good on its promise to form a stateowned and administered bank. Mercantile is 100% owned by Portugal’s largest bank, Caixa Geral de Depitos, which is selling as part of its restructuring process that it agreed to when bailed out by the European Central Bank during the 2008 global credit crisis.
The Mercantile Bank was the first bank in South Africa to cater exclusively for entrepreneurs since it opened its doors in 1965. Small and medium-sized businesses are also Nafcoc’s focus. In an interview with The New Age yesterday, Nafcoc president Lawrence Mavundla said this represented a great opportunity for blacks to own a bank.
Veteran businessmen Richard Maponya and Sam Motsuenyane, under Nafcoc’s umbrella, managed to launch African Bank in the late ’70s with a capital investment of R1m, but it was hit by financial troubles in 1995 and was sold. “Since then all efforts to try to reclaim the ownership of African Bank stalled. Recently, we mobilised for a bid to purchase Athens Bank, but again luck was not on our side. Now we are trying everything possible to clinch a deal to get Mercantile Bank.
“Plans are under way to gather up R1bn of the about R1.5bn we will need. We’re looking to the Public Investment Corporation (PIC) and a potential Chinese partner,” Mavundla said. He said the executive team of Nafcoc bid strongly two months ago for Bank of Athens, but for some reasons they did not met the criteria, as a result, the bid was unsuccessful. “The reason we approached the PIC and the Chinese partner is twofold. One, we need seasoned bankers on board. Two, we need big capital as a buffer,” he said.
Mavundla said there was a need to reform the economy and at the same time help entrepreneurs to acquire capital. “It is long overdue for blacks to have a bigger stake in the banking sector. “The Reserve Bank should understand that lack of ownership of financial institutions is the reason our society is not transformed and should approve a new licence for majority black ownership,” he said.
The PIC did not responded to questions. Mercantile Bank CEO Karl Kumbier has said they are seeking investors “with deep pockets”. “Deep pockets means you are able to guard our capital. That’s why I think it’s quite an exciting prospect. You can get a fully fledged bank for a NAV (net asset value) of R2.5bn, which is much more doable than trying to do a massive transaction.” For the year December, Mercantile grew net profit after tax by 21%, lending by 20%, deposits by 26% and long-term funding by 30%.
“The bank’s total balance sheet is now at R12.2bn with R2.2bn in capital, which equates to a capital adequacy ratio of 19% – nearly double the amount of capital required by the regulatory authorities,” Kumbier said.