Postbank waits for licence to lend

2011-07-02 13:33

As Postbank makes a strong bid to transform itself from a deposit-taking institution into a retail ­lender, its six million customers may still have to wait another 18 months before receiving their first loans from the bank.

John Wentzel, acting managing director for Postbank, said the ­aspiring lender expected to submit its application for a full banking ­licence with the South African ­Reserve Bank (SARB) by the end of March next year.

He gave no indication of how long it would take to get the licence, but potential competitors in the banking sector reckon it could take up to 18 months.

“Applying for a banking licence is a complex undertaking,” said Wentzel. “The SARB has very strict requirements that need to be met before it will consider granting Postbank a banking licence. With such a complex project difficulties may arise and delays may result.”

Potential rivals such as First National Bank (FNB) and Capitec ­ fear that Postbank, which is 100% state-owned, could get assistance or big subsidies from the government, which could give it an unfair advantage in the market.

It will enter the retail lending market with a customer base of 6.2 million – mainly depositors – and will become a threat to competitors such as Capitec, ­African Bank and FNB’s low-cost banking network, known as EasyPlan, as it could reduce the cost of credit and banking.

Postbank also has a deposit base of R6.4 billion and is expected to take advantage of the 1 448 branches of its parent company, the Post Office, to roll out its services and products.

Wentzel said that as part of its strategy to enter the market Postbank was looking for a strategic advisor to help it with its corporatisation process, which would pave the way for its conversion from a government-controlled business to an independent company.

“The tender process for acquiring an advisor for the corporatisation process has not been finalised,” said Wentzel.

But a Postbank executive who did not want to be identified for fear of victimisation said accounting firm PricewaterhouseCoopers had been chosen as the preferred bidder for the two-year contract and stood to earn as much as R55 million in fees for the job.

Postbank said it had not yet ­finalised the process of finding a preferred bidder and denied awarding the contract to PricewaterhouseCoopers. The accounting firm said it did not divulge information on confi-dential client matters and referred enquiries to Postbank.

Asked if it would be fair to conclude that the roping in of a strategic advisor meant that Postbank did not have the management capacity to launch retail banking on its own, Wentzel responded: “Postbank has been serving its customers for 100 years and management continues to successfully run a profitable bank.”

Giving voice to the anxiety of potential rivals about Postbank’s imminent entry into mainstream banking, Gift Manyanga, the chief executive of EasyPlan, acknowledged the would-be lender could stir up competition if it played its cards well.

“Postbank has a better reach and point of presence than any of the existing competitors, which gives it a great advantage,” he said.

“I hope Postbank won’t get special treatment from government in the form of subsidies or by being excluded from meeting some requirements of Basel III. Any of the issues I am raising could give it an unfair advantage over its competitors. The playing field should be equal for all.”

Basel III is a set of world-class recommendations on banking laws that stipulates how much equity capital (money that is not borrowed) banks need to put aside to guard against going bankrupt.

In the wake of the 2008 global credit crisis, which led to the failure and in some cases bailout of many banks, lenders are now be required to put aside more money of their own to reduce the risk of going bust.

Under the Basel III rules, if a bank is carrying mainly unsecured loans in its loan book, it will have to put aside more funds than a bank which is carrying less risky loans, which are usually backed by collateral.

Carl Fischer, Capitec head of marketing and corporate affairs, said even if Postbank were to receive subsidies from the state its success would be determined by the quality of its service.

“Since banking is a service industry its success will depend on the quality of its customer service, management and how motivated its people are,” he said.

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