Suspended Blue Financial Services is not about to exit the South African market. Even with a suspended insurance licence and suspended JSE listing, the diversified financial services firm said it was eyeing opportunities in the new direction that it wanted to take.
“Blue SA cannot rule out resuming lending once conditions permit in South Africa,” group chief executive Johan Meiring said in an e-mailed response yesterday.
But he said for now, the company would focus on asset rehabilitation as the core of its business in South Africa.
Blue, the pan-African diversified financial services group that stopped providing unsecured loans in South Africa in October last year, had its financial services provider (FSP) licence, permitting it to offer credit life insurance, withdrawn by the regulator, the Financial Services Board (FSB).
This followed Blue’s failure to publish two sets of its financial results. The last set of results published by Blue was in August 2012. Meiring said the company hoped to publish its latest financial results by the end of March as it was aiming to publish a second forensic report on suspected financial irregularities.
Blue voluntarily suspended its shares on the JSE to allow for the finalisation of two forensic reports on the matter, one that would look at the company’s affairs before 2010.
The first report on the pre-2010 investigation has been finalised and the second one is expected to be published by the end of the month.
Blue faced near collapse in 2010 before it was recapitalised in December that year through a black economic empowerment share subscription by the Mayibuye Group. In that year, Blue reported a net loss for the year of R1.03 billion but after the recapitalisation it had been totally transformed as Mayibuye revamped its collections process and implemented a new credit approval process.
It was also during this period that Blue said it was reviewing its business model in South Africa in response to concerns about consumer indebtedness.
Before the FSB suspended Blue’s FSP licence, the company had already let its other unused licence lapse. The company stopped general insurance sales, which led to the Blue Insurance Administrators FSP licence being withdrawn, but it did not need it anyway.
But the group’s credit life insurance licence is still central to Blue’s business as it enables the company to collect the insurance premiums. Its suspension means that Blue cannot collect insurance premiums from existing customers now.
“We maintain the insurance cover at our cost at present – which is in the best interest of our customers, and we have already advised the FSB of how we are dealing with the situation. The costs of maintaining the insurance until we publish our financial statements are not material to either our income statement or balance sheet but is hugely beneficial to our customers,” Meiring said.
Meiring said Blue continued to operate normally in other African markets outside of South Africa. The company has identified growth opportunities, particularly in the payroll-based unsecured lending space.