One of the country’s most established banks, Mercantile Lisbon Bank, has undergone a complete makeover and hopes to return to profitability this year.
As part of the makeover, it has changed its name to simply Mercantile Bank and exchanged its somewhat staid image for a fresh look to match the new course on which it is embarking.
Even though the bank is Portuguese-owned, CEO Dave Brown says Mercantile wants to break away from the image of being a bank exclusively for the Portuguese community.
The bank’s major shareholder is Caixa Geral de Depositos (CGD), one of Europe’s largest banks.
After a number of unprofitable years, Mercantile recently had to be recapitalised in the amount of R555-million through a rights offer underwritten by CGD, but Brown says the bank won’t need any more capital in a hurry.
He insists the bank has turned the corner and that its main objective now is to work hard towards achieving profitability. Mercantile’s recovery, he believes, will depend on increasing new accounts, containing costs and growing its lending assets.
“I truly believe that if we achieve these goals, we’ll return to profitability this year,” he says.
Signs of the turnaround are evident in the banks results for 2004. While the group reported a R213-million loss for the year, the results included a R172,7-million impairment.
The recent rights issue was conditional upon the release by Mercantile of the guarantees from CGD totalling R332-million, which resulted in the R172,7-million impairment and write-off for Mercantile, and a simultaneous increase in the bank’s risk reserve of R27,4-million.
Excluding the impairment, Mercantile’s 2004 headline loss would have totalled only R41,1-million, an improvement on the R56,5-million loss recorded in 2003.
Brown adds that the change goes far deeper than signage, and he’s confident that over time it will reflect in the service clients receive.
The new image, he maintains, is symbolic of the fact that the bank has turned the corner.
“The bank’s metamorphosis into a more streamlined and relevant organisation has come about due to our renewed focus on our client’s needs — hence our new brand promise of focus. We have committed ourselves to a passionate, uncomplicated and tailored approach in our every action, whether dealing with clients or with each other.”
Concerning sensitivity around the decision to drop the word “Lisbon” from the name, Brown says the bank will work hard to assure clients of their continued commitment to the Portuguese community. “I believe our membership of CGD demonstrates this fact.”
The decision to omit the reference to Lisbon was taken when it emerged that many non-Portuguese people assumed that Mercantile was only a bank for Portuguese people.
“The bank’s primary focus is on enterprise banking for all South Africans whilst retaining a key focus on the Portuguese community,” Brown explains.
Brown concludes: “The new Mercantile Bank is committed to adding real value to the South African market by keeping the focus on our clients’ needs. As they grow, so will we.” — I-Net Bridge