South Africa’s central bank, South African Reserve Bank (SARB) plans to sell its 50 percent stake in African Bank within a span of two years, according to media reports. This move will bring SARB a step closer to allowing the bank to get its private ownership back after 2014 collapse. SARB took control of African Bank five years ago when low-income clients failed to pay back personal loans.
South Africa’s central bank injected R7 billion into African Bank as part of a bailout plan in exchange for bank’s bad loan portfolio and 50% stake, media reports said. Deputy Governor Kuben Naidoo told Reuters, “It is not the intention of the Reserve Bank to own the share for a very long time but we do want to ensure that the bank is sound and stable before we exit. So probably in the next year or two the Reserve Bank will be looking to dispose of its stake.”
The Prudential Authority which is responsible for regulating banks in its annual report found that Absa, FirstRand, Nedbank, Standard Bank, and Capitec Bank control 90.5 percent of South Africa’s banking assets as of March 31.International banks control 5.6 percent of the remaining market, 3.8 percent is owned by the rest, the report said. Standard Bank retained the top position in 2019 rankings with $9.8 billion. FirstRand bank stood second in the ranking followed by Absa and Nedbank.
“We think that this is very positive. We think it will promote competition and it will promote financial inclusion” Naidoo said. “So we’re quite excited about new players, some of them using new technologies to enter the sector.”