Is Patrice Motsepe buying a large stake in a bank?
Billionaire Patrice Motsepe’s African Rainbow Capital (ARC), which failed to secure a spot on the shortlist of buyers for Mercantile Bank, may soon own a bank after all.
This time around the mining magnate has a head start through ARC’s 10% share in what could become the fourth bank in two years to go on sale in SA, namely start-up TymeDigital.
This follows the on-market sale of Barclays Africa (now Absa) shares over the past two years by its former British parent, Old Mutual’s expected unbundling of Nedbank by year-end and an imminent deal involving Portuguese state-owned business bank, Mercantile.
ARC was one of 18 bidders to submit nonbinding offers for Mercantile, but did not make the shortlist of four.
Now TymeDigital could be up for grabs — as its 106-year-old parent, Commonwealth Bank of Australia (CBA), reviews international operations following an A$700m fine over weak anti-money laundering controls — TymeDigital could be up for grabs.
ARC, an investment holding company that at March 14 had R2bn for acquisitive deals, would be a natural buyer. It already has a number of stakes in financial services businesses, including Alexander Forbes and challenger stock exchange, A2X Markets.
ARC declined to comment on whether it was is in talks with CBA to buy TymeDigital, but CBA has confirmed a review of its South African operations.
"We are in the early stages of a strategic review and we will provide updates on any significant developments," a spokesperson for the bank tells the FM. "The approach is in line with CBA’s strategy to build a simpler, better bank that is focused on our core banking franchise in Australia and New Zealand."
TymeDigital, says the spokesperson, is on track to launch its digital banking offering by the end of the year.
CBA bought TymeDigital, born out of a Deloitte Consulting project called Take Your Money Everywhere (TYME), for about A$40m in January 2015.
CBA had committed another A$1bn to rolling out the bank, co-CEO of ARC Johan van Zyl has previously told Business Day.
The banking start-up, which in September last year clinched the first full banking licence issued by the Reserve Bank since Capitec in 1999, had intended to market its first banking product to the public in the middle of 2018.
A possible exit by its Australian parent could explain the delay. Initially keen to do an interview with the FM, TymeDigital later said that its CEO, the former Nedbank business banking head Sandile Shabalala, would be available for interviews only after CBA publishes financial results on August 8.
Australian media have already speculated that a sale of TymeDigital could be on the cards, as part of what the Australian Financial Review said was a "retreat from international markets" on the part of CBA.
The bank was slapped with a $700m fine in June, reportedly the largest in Australian corporate history, by the country’s financial intelligence agency for contravening anti-money laundering and counter-terrorism laws.
Unsurprisingly, a management shake-up and operational review ensued. The executive leadership team reshuffle saw the roles of chief risk officer and chief information officer handed to external candidates.
Now, CEO Matt Comyn, who joined the bank in April following a serious of damaging scandals that led to the departure of five executives and closer regulatory scrutiny, is out to create a "simpler, better bank".
As part of Comyn’s efforts, CBA announced plans in June to spin out and separately list its wealth management and mortgage broking businesses. It is also mulling a sale of its general insurance business.
These initiatives, says the bank, will enable it to focus on its core banking businesses in Australia and New Zealand.
Naturally, questions have been raised over whether CBA sees TymeDigital — and SA business generally — in its simplified future.
"I think new CBA senior management will likely consider selling the SA business," David Ellis, head of Australian banking research at Morningstar, tells the FM.
"Considering the major restructuring in CBA’s wealth, asset management and life insurance businesses, it is likely that the SA business will be sold sooner rather than later."