Good news for African bank. The financial institution said it has achieved all the approvals to acquire 100% of Grindrod Bank.
In a statement the company said that all the conditions precedent to the Grindrod Bank transaction have been met, and all the necessary regulatory approvals were obtained on October 6 2022.
African Bank went on to add that this follows the Competition Tribunal’s approval of its acquisition of Grindrod Bank with no conditions and the subsequent issuing of a merger clearance certificate.
The Tribunal’s certificate stated that after reviewing all relevant information and the recommendation of the Competition Commission, the acquisition has been approved in terms of Section 16(2) of the Act.
“This is an important step in the process of final incorporation and we commend the Commission and the Tribunal for their hard work and swift decisions,” African Bank CEO Kennedy Bungane said.
HOW MUCH IS THE DEAL WORTH?
The acquisition started in May 2022 and it was reported that the deal to acquire Grindrod Bank was valued at R1.5-billion.
The main aim of the merger and acquisition was to accelerate African Banks’s entry into the South African business-banking sector.
A CLOSER LOOK AT THE DEAL
While African Bank has indicated a wish to diversify from retail banking, its business banking aspirations are to tackle the lower to middle-income business banking market, such as providing funding for small business owners.
Explaining the merger rationale, Grindrod Bank CEO David Polkinghorne said that while it was true that Grindrod Bank currently focused on the higher end of the market, it had never in the past been afraid to diversify, such as, for example, a few years back when it had 10 million Sassa customers.
However, he said the bank was at a stage where it had wished to grow into the middle business banking market, so the merger meant that Grindrod Bank and African Bank were aiming to grow into the same market, just from opposite ends of the market.
He said the merger also made sense from Grindrod Bank’s perspectives - it holds some R12 billion in deposits and R9bn in loans - in that its parent Grindrod needed to focus on its freight and transport corridor operations.
He said the much the same kind of thinking went behind Capitec’s recent purchase of Mercantile Bank in 2019, and he foresaw in time the creation of a merged bank with two separate arms, in much the same way as FNB is a retail bank in the FirstRand group, while RMB is the investment banking arm.
Read more on the background of the deal HERE!
BUSINESS REPORT