South African banking group FirstRand said on Friday it had reached an agreement to acquire troubled Saambou Bank for a nominal one rand.
The transaction will see FirstRand assume deposit liabilities valued at R12,8-billion and acquire the residential mortgage loan book of Saambou.
The deal excludes the microlending and asset-based finance books of Saambou, which will be ring fenced into a receivership, said a joint statement from FirstRand and Saambou’s curator.
Financial authorities took No. 7 bank Saambou into curatorship — or administration — in February after depositors, nervous about its exposure to the risky small loans sector, pulled over a billion rand from accounts in a few days.
Saambou depositors will have full access to the capital and interest of their deposits on existing terms and conditions with effect from Thursday, May 23, the statement said.
Mortgage bond holders will have access to any prepaid amounts on their mortgage bonds from the same date.
Shares in FirstRand, the country’s second biggest bank by market value, were up 0,1% at 840 cents at 0930 GMT versus a 0,3% decline in the local banking sector.
”The cooperation of FirstRand with the curator and public sector has resulted in a mutually beneficial transaction that will contribute to the ongoing stability of the banking sector and resolve the position of Saambou depositors and mortgage bond holders,” the statement said.
FirstRand said the deal was in line with its growth strategy and, together with the acquisition of the NBS home loan book in March 2002, would boost the group’s market share by 20%.
The curator had wanted to sell Saambou as a going concern, then suggested establishing a public-private partnership when no one came forward to take the bank whole.
But it then said FirstRand would get some of Saambou’s assets in a purely commercial transaction and a receiver would manage the rest.
FirstRand emerged as the sole bidder to join the government after fellow big bank Nedcor pulled out of the running following its successful underwriting of the cash element of its R7,3-billion cash and paper offer for Saambou peer BoE. – Reuters