Absa Capital HQ. Picture: SUPPLIED
Absa Capital HQ. Picture: SUPPLIED

Absa has sold its Edcon store card debtors’ book to RCS Group, a subsidiary of BNP Paribas Personal Finance. 

No amount has been given for the transaction, which is still subject to regulatory approval. Absa acquired the debtor’s book for about R10bn in 2012, which at the time had 3.8-million active card accounts, but this number has steadily declined.

RCS has also entered into commercial agreements with Edcon, which owns Edgars, CNA and Jet, for the rights to provide consumer finance products to Edcon customers, inclusive of credit cards, store cards and personal loans.

“The sale is positive for Absa as it will free up capital and management time to focus on executing against the strategy that Absa announced last year,” said CEO of retail and business banking at Absa Arrie Rautenbach in an e-mailed statement.

“In terms of the strategy, our priority is to regain our leadership in core areas,” he said.

At the time of the 2012 transaction, Edcon was SA’s largest credit provider by number of customers, though the group has battled, having said in 2016 that Absa was unable or unwilling to provide additional support to the store-card programme, amid tightening credit regulations.

In March 2019, Edcon reached a recapitalisation deal with the Public Investment Corporation (PIC) which resulted in a R2.7bn cash injection. Edcon said at the time its credit sales growth was exceeding cash sales growth, and the number of active accounts was increasing for the first time since 2012.

RCS has 1.2-million customers in Botswana, Namibia and SA, with a book value of about R10bn. RCS would acquire more than one-million additional store card customers as a result of the deal.

“This deal significantly strengthens our position as the leading provider of retail consumer finance products and provides the company with the opportunity to grow, for the benefit of our shareholders, our people and our customers,” RCS CEO Regan Adams said.

CEO of Edcon Grant Pattison said on Tuesday the partnership with RCS would not only grow Edcon’s credit business and customer base, “it also offers our customers a more diverse and dynamic set of consumer finance solutions”.

Growing credit sales was key to Edcon's turnaround plan, Pattison said.