Capitec and life beyond SA's "big four" banks
Standard Chartered may have lost out to Hsbc in the battle to acquire Nedbank, but the emerging-markets specialist is unlikely to lick its wounds for very long. Rumour has it that StanChart is already considering another acquisition to strengthen its presence in South Africa, and this time it is looking beyond the country's "big four" banks.
The most likely candidate is Capitec, a small but fast-growing and innovative Western Cape-based bank, which has a client base of 2.1m and is adding over 70,000 new customers a month. Its success has been built on eliminating red tape and using technology to simplify banking. "In our view Capitec is one of the exciting new brands in South Africa," says Walter Jacobs, Credit Suisse analyst, commending its "high-tech, low-cost model". One of the reasons StanChart is interested, according to a source, is that it is already familiar with that model from its Indian operations, which "are doing very well".
"There has been some interest but no formal offers as yet," says Carl Fischer, Capitec's head of corporate affairs from the bank's HQ in Stellenbosch. "Our investors are happy with our performance but of course everybody has a price."
In the meantime, Capitec continues to grow and hire. "We have started out of the ashes of microlending with an objective to offer full service banking," says Fischer. "We focus singularly on simplified, technology-based banking and paperless transactions. We are opening 50 new branches a year so we need people. We recruit directly some 200 people a month and we do in-house training. Our problem is our people are so good they tend to get poached by the big banks."
The "big four" (Standard Bank, Absa, FirstRand and Nedbank) represent 85% of total banking assets and over 90% of the retail lending market, so their dominance is unquestioned. But there is life beyond them, as Capitec and other smaller players are showing. Most importantly "only about 50% of the bankable population is currently banked and the personal savings rate is low, less than 15% of GDP compared to 35% in India," says Shilpa Singhal, analyst at Standard Chartered. "The South African banking system has further growth potential."
