Big South African bank to be sold before end of 2024

Bidvest Bank is currently up for sale and its owner, The Bidvest Group, plans to find a buyer for the bank before the end of 2024.

The group released its results for the financial year ended 30 June 2024 on Monday, revealing strong growth and plans for further expansion.

It also provided an update on the future of Bidvest Bank and FinGlobal, which have been up for sale since early July. 

“Following a portfolio review, we made a significant strategic decision to dispose of Bidvest Bank and FinGlobal,” the company said. 

“The Bidvest Bank and FinGlobal disposal process is underway, and management aims to identify a suitable acquirer/s by the end of the  2024 calendar year. The transaction/s will be subject to several relevant regulatory approvals.” 

When it first announced its plans to dispose of Bidvest Bank, the group said it had determined the financial services division to be outside of its core competencies. 

“The opportunity to facilitate a step-change in value-creation for all stakeholders does not arise often,” CEO Mpumi Madisa said. 

“The strategic restructure of Bidvest Financial Services allows us to set these businesses up for their next phase of sustainable expansion whilst recycling capital to position the group for continued growth.” 

Through Bidvest Bank and FinGlobal, the company offers banking and related services to South African corporates, with a particularly large fleet management business. 

It also provides various insurance products, which will be disposed of along with the bank and FinGlobal. 

However, Bidvest will retain ownership of its short-term insurance business, which is primarily focused on vehicle insurance and related products. This business has been transferred to the Automotive division. 

Thus, after the disposal of its financial services businesses, Bidvest will have six operating divisions – Services International, Freight, Services South Africa, Commercial Products, Branded Products, and Automotive. 

It is still unclear who would purchase Bidvest Bank and whether the company will be bought in parts or disposed of whole to any suitors. 

South African banking shakeup 

South Africa’s banking sector is set for significant changes before the end of 2024, with Old Mutual set to launch its new bank before the end of the year.

The insurer has been building out its banking functionalities since November 2022, when it received a licence to operate as a bank from the Prudential Authority. 

Old Mutual’s bank, which is said to be called OM Bank, is closely tied to Bidvest Bank through its Old Mutual Money Account. 

This partnership is set to end when Old Mutual launches its new bank. 

“Establishing a bank within the group will allow us to maintain a primary relationship with our customers, driving greater regular interaction with them and enhancing cross-sell opportunities across the group,” the insurer said in its latest annual report. 

“It will also enable the group to accept retail deposits, thereby providing a cheaper source of funding.”

In April, Old Mutual received Section 17 approval from the Prudential Authority to begin testing its incorporation into the National Payments System in the second half of 2024. 

This integration will take around three months once approval is given. Only after this integration can the bank be tested end-to-end. 

The insurer said building a bank is central to its plan to become a fully integrated financial services ecosystem and the primary touchpoint for its clients. 

Old Mutual built the bank from scratch using cloud technology from 10x Banking, allowing it to deliver personalised, cost-effective and flexible solutions to its customers. 

In particular, the insurer is targeting the upper mass market and lower affluent consumers – customers earning between R5,000 and R80,000 per month. 

The insurer plans to leverage the 3.1 million customers served by its Mass and Foundation cluster to lure new clients to its new bank offering.