Absa finally arrives
South African banking giant Absa, which has been battling for years to enter into the lucrative local banking industry, has finally been rewarded for its persistence after the Bank of Namibia announced this week that it has given parent company, Barclays the go ahead to acquire a 49.9% indirect shareholding in Bank Windhoek.
Deputy governor, Ebson Uanguta told reporters on Thursday that the central bank approved the potential acquisition (49.9%) of Capricorn Investment Holdings, Bank Windhoek’s parent company by the Barclays group while leaving the majority ownership (50.1%) in the hands of locals.
The approval is subject to two conditions: the first was that Barclays should hold shares in Bank Windhoek despite Absa applying for the right to be granted permission to buy a stake in the bank. The other condition was that Bank Windhoek should list on the Namibia Stock Exchange within a prescribed period ranging from “18 to 24 months or longer than that” after the approval date.
Bank Windhoek is expected to keep its trading name after the acquisition by Barclays which holds a controlling 55.5% stake in Absa.
Thursday’s announcement follows Absa’s application to acquire at least 70% shareholding in Capricorn Investment Holdings was declined in 2010. The application was rejected because it would have pushed up foreign ownership of local banks from 65% to close to 80%, a move the deputy governor said was not in line with the national development objectives as articulated in Vision 2030 and the National Development Plans.
Uanguta added that, the approval if granted then, would have also exposed the Namibian banking industry to a single country risk.
The Bank of Namibia, however, said it considered the new approved transaction to be in line with the Namibian Financial Sector Strategy. “This is so, especially in relation to achieving diversification of the ownership in Namibian banks and increasing local participation in domestic banks through institutional ownership and broadening ownership through listing of banks on the Namibian Stock Exchange.,” Uanguta explained.
Details of how much the transaction was worth, if it goes ahead, were not immediately available at the time of going to press.
The transaction is subject to approval by the Namibia Competitions Commission. Although Uanguta said he was not in a position to speak on behalf of the Commission, he said the last time that Absa applied to be given permission to acquire shareholding in Capricorn, the Commission had “no major problems with the takeover.”
The decision to grant Absa’s parent company approval to hold an indirect shareholding in Bank Windhoek comes hot on the heels of an agreement by South Africa’s largest retail bank by customer numbers, with leading South African retailer, Edcon, to acquire the accounts and receivables relating to the private label store cards of Edcon, including the Edgars, Jet and Boardmans brands.
Absa and Edcon further agreed to enter into a long-term, strategic relationship under which Absa will provide retail credit to Edcon customers. Edcon also trades in Namibia under its flagship stores Edgars and Jet.As part of this landmark deal, with an indicative value of approximately N$10 billion, Absa will have responsibility for credit, management of fraud, risk, finance, legal and compliance operations of the store card business, while Edcon will retain all customer facing activities, including sales and marketing, customer services and collections.
Absa group and Barclays Africa chief executive Maria Ramos described the agreement with Edcon as a major milestone for both organisations.
“This is a significant addition to our retail finance offering. Unsecured lending is a key market for Absa to channel capital into under-served communities, while adhering to responsible lending practices in the best interests of our customers and the bank. Our relationship with Edcon significantly strengthens our presence in this space.”
Completion of the acquisition is subject to regulatory approval and other customary conditions and the transaction is expected to come into force in the second half of 2012.