Black clients stand to benefit from Nedbank’s black economic empowerment (BEE) deal that will see approximately 11,5% of the banking group falling into the hands of a broad-based empowerment group.
Nedbank announced on Tuesday that black individuals who hold a primary account with Nedbank or its divisions stand to benefit from an innovative bonus-share scheme that will see them collectively owning 2,17% of Nedbank Group.
The retail client share scheme, known as the Nedbank Eyethu Ownership Plan, was announced on April 19 as part of the group’s BEE transaction, which received shareholder approval on July 22.
In terms of the ownership plan, which opens for applications on August 15, eligible retail clients will receive one bonus share for every three Nedbank shares they buy at market prices, provided they retain their primary banking account with Nedbank for a minimum periods of 36 months.
A total of 9,5-million shares — comprising 7,1-million new shares and 2,4-million bonus shares — will be up for grabs.
“We are extremely proud that Nedbank was the first bank to include clients as beneficiaries in a BEE transaction. The Nedbank Eyethu Ownership plan is aligned with our empowerment strategy and allows us to broaden ownership of the group to include a new generation of shareholders,” says Clive van Horen, MD of Nedbank Retail Banking Services.
“We see this as an opportunity to extend existing partnerships with black clients and to reach out to potential new clients. We want to demonstrate that Nedbank is serious about transforming itself into a bank for all South Africans,” says Van Horen.
Commenting on the details of the offer, Van Horen says a significant benefit to clients is that as long as they comply with some simple conditions, they can acquire shares in one of the country’s leading banks, without facing the usual risks associated with this type of investment.
“Provided clients maintain a primary account with the bank for the required 36 months, they will be guaranteed their original investment.
“In other words, if at the end of three years the combined value of the shares they purchase and the bonus shares due to them is less than the original amount invested, they will have the opportunity to receive their original investment back in cash. This means there is really no material downside risk to participants,” he says.
A primary account includes a savings, current, transmission or Mzansi account held with Nedbank, Old Mutual Bank, Pick ‘n Pay Go Banking and Peoples Bank. The account must remain active (a minimum of five client-initiated transactions a month) for a minimum of 36 months from the time the shares are purchased.
Clients can acquire shares either through a lump-sum option, a buy-as-you-go option or a combination of both.
With the lump-sum option, a minimum payment of R2 000 is required. Clients who select the buy-as-you-go option can choose to make fixed automatic monthly payments, with a minimum payment of R50 and a maximum of R1 000 per month.
The maximum amount that any individual may invest as part of the Nedbank Eyethu Ownership Plan is R100 000. — I-Net Bridge