Capitec says its acquisition of Mercantile Bank, which has recently been approved by the Competition Tribunal, will speed up its entry into the business banking market by at least 2 to 3 years.
The Tribunal announced that it had approved the merger without conditions, as it did not raise any competition or public interest concerns.
According to Andre du Plessis, Capitec’s chief financial officer, diversifying into business banking had been part of the bank’s business strategy, including secured lending.
"We believe the acquisition of Mercantile will bring our entry into the business banking market forward by at least 2 to 3 years,” Du Plessis told Fin24. The Competition Commission earlier recommended the approval of the deal.
Du Plessis said before the sale of Mercantile came to the market, Capitec had identified a need for simple and affordable business banking solutions aimed at supporting the growth of small to medium enterprises.
“When the Mercantile sale came to the market, we identified that the majority of the functionality and products small to medium businesses wanted, Mercantile had already developed,” he said.
Founded in 2001, Capitec, which targets the lower market segment, has rapidly grown its client base to 11.4 million, according to the latest figures provided by the bank.
The Competition Tribunal said in a statement Capitec was selected by the Portuguese government as the successful bidder among 60 expressions of interest received from foreign and local bidders.
Mercantile Bank provides business and commercial banking services. It also has a private banking offering.
The Portuguese Council of Ministers in November announced its approval of the sale by Caixa Geral de Depósitos (CGD) of its entire stake in Mercantile Bank to Capitec.
CGD, which owned 100% of Mercantile, sold the bank as part of a strategic recapitalisation plan approved by the European Commission, requiring CGD to reduce its foreign assets.