ON THE MONEY
STUART THEOBALD: Competition in retail banking starts hotting up
Discovery, Tyme Bank, Bank Zero, the refreshed African Bank and newly invigorated Sasfin need to raise deposits to begin financing their asset accumulation
In the late 1990s 45 banks, mutual banks and homeland banks were operating in SA. That fell to a low of 18 by 2010, following a crisis of confidence in small banks. But the long hiatus since is over with the count of banks back up to 23 following a rush of new entrants. What will it mean for the marketplace? A look back at the last upcycle reveals a few things.
Bank registration rates follow regulator and market appetites. The last strong upcycle was in the mid-1990s when the new ANC government encouraged licensing to drive competition and the creation of black-owned banks. A raft of new investment banks had their eyes on lucrative government advisory contracts. Those that entered were focused on the fruits of restructuring — advising the government on how to raise funding and sell assets.