France's largest bank BNP Paribas to buy South African credit provider

RCS Investment Holdings extends credit to consumers. The company is currently owned by Standard Bank and Foschini Group. (Gallo)

RCS Investment Holdings extends credit to consumers. The company is currently owned by Standard Bank and Foschini Group. (Gallo)

BNP Paribas has begun to negotiate the purchase of RCS Investment Holdings, a consumer credit provider owned by Standard Bank and Foschini.

France's largest bank, BNP Paribas, has started talks to buy RCS Investment Holdings, a South African provider of consumer credit, from Standard Bank Group and Foschini Group for R2.65-billion ($254-million).

BNP Paribas Personal Finance will complete the cash transaction by September, Johannesburg-based Standard Bank said in a statement on Thursday. RCS had a net asset value of R1.7-billion at the end of September, the statement said.

RCS is a joint venture between Foschini, a clothing retailer that owns 55%, and Standard Bank, Africa's largest lender. Credit demand from South Africa's growing black middle class has helped boost retailers' earnings. BNP, France's biggest bank, first expanded in South Africa when it bought a controlling stake in Cadiz Holdings's securities unit in 2011.

Foschini, which may make about R1.4-billion, will use the proceeds of the sale to repurchase its own shares, the Cape Town-based retailer said in a separate statement on Thursday. The company has wanted to reduce its shareholding in RCS to less than 50% since last year because a large portion of its debt is linked to RCS, it said.

Standard Bank plans to use the additional capital released from the sale to invest in its African operations, the lender said in an emailed statement. "The proceeds will provide Standard Bank with leverage for growth opportunities and will help improve the group's return on equity," it said. – Bloomberg

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