Johannesburg - Standard Chartered, the UK lender that lost out last year on a bid to buy Absa, plans to close the South African internet bank it bought three years ago.
Standard Chartered, which bought online bank 20twenty Financial Services in 2003, said on November 2 2005 that it would sell the internet bank to focus on building its loans business in South Africa. It has now decided to close the unit and redirect its clients to rival banks.
"We're not selling the book any longer," Lauren Callie, a spokesperson for Standard Chartered, said yesterday in Johannesburg. "It was a tough decision that we had to make after reviewing our consumer banking strategy."
Callie declined to say how many customers the company would lose. 20twenty clients would be able to move their accounts from next week to Pick 'n Pay's Go Banking through an automated approval process, she added. They could also ask for their funds to be moved to accounts at other banks. Go Banking is a venture between Pick 'n Pay and Nedbank.
Standard Chartered paid less than $10 million (R61 million) for 20twenty in August 2003. The acquisition came a year after 20twenty's parent, Saambou Holdings, collapsed when depositors withdrew their savings faster than the bank could raise cash. The deal marked a return to consumer banking in South Africa for Standard Chartered, which had sold its branches in 1987 because of apartheid.
The UK lender planned to expand its consumer and wholesale banking business instead of making acquisitions in South Africa, Chris Low, Standard Chartered South Africa's chief executive, said last year.
As many as 100 of Standard Chartered's 230 local employees might be displaced by the unit's closure, and they would either be offered severance packages or jobs at other divisions abroad, Callie said.
Its Cape Town unit would be moved to Johannesburg "over the next few months", she added.
- Bloomberg