SA’s FirstRand to acquire Saambou

SOUTH AFRICAN banking group FirstRand has made an offer to acquire troubled Saambou Bank and would not be working with the government in a public-private partnership as originally thought, Saambou’s curator said.

”It’s simply going to be a transaction between FirstRand and Saambou Bank, the company,” Saambou’s curator John Louw said on Tuesday. ”It is in every respect a commercial transaction.”

Saambou was taken into curatorship – administration – by financial authorities in February after depositors, nervous about the bank’s exposure to the risky small loans market, pulled a billion rand from accounts in a matter of days.

The curator had originally wanted to sell the bank whole but invited bids from companies interested in working in a public-private partnership when no one emerged with an offer.

FirstRand and Louw said on Friday that the National Treasury had in principle approved a deal on Saambou but gave no further details. It was widely thought the deal would involve the government providing liquidity support to Saambou and FirstRand providing management.

”Clearly we will co-operate with FirstRand in every respect,” Louw said. ”But it’s no longer going to be a partnership.”

Last week, the curator said the deal would allow depositors to access all funds. Saambou customers have only been able to access a certain portion of their accounts since curatorship.

But Louw said the transaction ”was not going to result in any payments being made to shareholders”. Trading in Saambou shares was suspended when it was taken into curatorship.

South Africa’s banking sector is slowly recovering from a series of hefty knocks since the start of the year, including a profit warning at big bank Absa, deposit runs at Saambou and peer BoE and two interest rate hikes.

Last week Nedcor, which also initially put forward a proposal to the curator on Saambou, pulled out of the running after it successfully raised the cash portion of its friendly 7.3 billion rand offer for BoE.

Small bank Brait surprised the market on Monday when it announced it was cancelling its banking licence because of damage done to small deposit-taking institutions in the wake of Saambou. – Reuters

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