RCS gets green light to take over Edcon loan book

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Consumer finance business RCS now owns and controls retailer Edcon's book debt, the Competition Tribunal has ruled.

This means RCS will be able to sell Edcon customers credit cards, store cards and personal loans.

Members of the Tribunal on Wednesday held a hearing where it approved two large merger transactions that would see financial services provider RCS acquiring Edcon's book debt –  that had been partly owned by Edcon and partly owned by Absa.

Edcon is the parent company of clothing stores Edgars, Jet and bookstore CNA.

RCS is part of French group BNP Paribas Personal Finance. It focuses on unsecured credit, including retail credit card facilities and insurance products in SA. It has two main business lines – transaction products such as card products, and fixed term finance or loans.

In October 2019, RCS announced it had acquired Absa's stake in the Edcon store card portfolio. The amount of the transaction was not made available – Absa had bought the credit card portfolio for R10bn in 2012, Fin24 reported. At the time, Edcon was struggling with a heavy debt burden, which is why it sold part of the portfolio to Absa. The Absa book debt includes active Edcon store card accounts and gross receivables. 

RCS also clinched a deal with Edcon to sell credit cards, store cards and personal loans to customers.

A competing retailer raised concerns that the merger would result in RCS becoming the largest store credit provider in SA and a dominant player in the store card credit market. However, after conducting an assessment, the Competition Commission concluded that the acquisition would not have an adverse impact on competition in the sector and recommended to the Tribunal to approve the transaction unconditionally.

Speaking at the hearing on Wednesday, Edcon CEO Grant Pattison said that Edcon customers or cardholders would not be impacted by the transactions, nor would the terms and conditions of their accounts change.

"This transaction is about how the credit machinery works in the background," he said.

*CORRECTION: This article was amended on Friday January 17, 2020 at 16:50 to reflect that RCS is a consumer finance business, and not a microlender as previously reported.

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