South Africa getting a new bank next year

Pepkor hired Merwe Scholtz to head its new banking initiative as Africa’s largest seller of clothing and mobile phones prepares to operate an independent lender from next year.

The Cape-Town-based company already sells smartphones and offers credit to customers — adding deposits is a final step needed for full-service banking, it said in an investor presentation Tuesday.

This confirmed earlier Bloomberg reports that the retailer was weighing plans to launch a lender on its own.

With about a sixth of South Africans unbanked or underserved, the move positions Pepkor alongside retailers that are leveraging loyalty-program data to expand into banking, such as Shoprite. 

Pepkor plans to use its more than 6,500 stores for the digital bank, with a total build cost target of less than R1 billion and a return-on-equity target of more than 30% from the lender’s fifth year.

No bank has entered the local market with all these assets in place, it said.

An independent advisory board will keep the bank accountable and is already largely in place, it said. Pepkor received regulatory approval last year to establish a banking unit and has acquired a financial-technology platform to support the expansion. 

In December, it appointed former Investec CEO Richard Wainwright as an independent non-executive director. 

Pepkor is weighing plans to abandon a possible partnership with Investec and instead launch a lender on its own, Bloomberg reported earlier.

The retailer, Africa’s largest seller of clothing and mobile phones, had considered teaming up with Investec to expand into financial services.

It’s now mulling a plan to roll out the venture independently, the person said, asking not to be identified because the process is ongoing. A final decision hasn’t been made.

Pepkor’s fintech revenue rose 31% to R16.6 billion in the year through September, accounting for 17% of total sales.