Eastern Cape Business 2018 edition

OVERVIEW Banking and

OVERVIEW Banking and finance New banking licences are being issued. Agriculture and renewable energy are two of the most important economic sectors in the Eastern Cape. The first is as old as settlement in the province, the second has taken off only in the last few years: for both sectors, the banking and financial services sector is vital. All retail banks have agricultural desks, several finance agencies of provincial and national government have an agricultural focus, and most of the large agricultural companies have a range of financial products to offer farmers. Nedbank Business Banking has a new focus on agriculture, with business managers in Port Elizabeth, Humansdorp and East London all supported by agricultural specialists. Nedbank sponsors the Komga Show and the bank has paid out loans to the Humansdorp Co-Op which specialises in citrus and dairy products. In the far north-eastern part of the province, Nedbank, the WWF, and Environmental and Rural Solutions (ERS) are partners in a project to improve land use and to develop a cattle auction to assist farmers and buyers in the area to get better access to markets. In 2017 the fourth cattle auction was held at a specially developed site in Mzongwana. Improved grazing techniques are leading to better prices being paid by commercial farmers. The agreement that Absa Business Bank (ABB) signed with agricultural company BKB allows farmers to borrow money against their produce. The bank flagged the event as the precursor to a possible future agricultural bank. With ABB’s experience in the agricultural field, and BKB’s access to 19 000 primary producers, the agreement has the potential to unlock investment in the agricultural and agriprocessing sectors. BKB has a national presence, but its headquarters are in Port Elizabeth. It is active in many spheres and has a strong wool and mohair profile. Investment company PSG Group is one of the biggest investors in Capitec and is a majority shareholder in PSG Konsult, a financial services company. Like other companies of its type, PSG Konsult is present in the big Eastern Cape towns, but it also has a presence in regional centres such as Middelburg and Aliwal North. From the Karoo Midlands towns of Graaff-Reinet, Cradock, Adelaide and Somerset East, the firm of Gerber, Botha & Gowar dispenses financial advice across SECTOR INSIGHT Nedbank and partners are raising incomes in a rural community. large parts of central South Africa. Standard Bank, which was founded in Port Elizabeth in 1862, operates in 32 countries (20 in Africa), has nearly 69 000 employees and assets in the region of -billion. Together with the other banks, consulting companies and other firms in the financial and business services sector, it is responsible of 19.2% of the Eastern Cape’s Gross Domestic Product (StatsSA). The sector provides employment for 141 000 people. In Port Elizabeth, there is a geographic concentration of financial services: the city’s own financial district stretches along a section of Cape Road from Mill Park to Newton Park and includes the Greenacres shop and office complex. This includes the offices of PSG Konsult, Liberty Life, Alexander Forbes, Hollard and Momentum. Nedbank Business Banking has its headquarters just one block away from the Greenacres complex. Only AON appear to buck the trend, with offices in Central. EASTERN CAPE BUSINESS 2018 58

OVERVIEW Also on Cape Road and in the Greenacres complex is FNB’s regional office, FNB Newton Place. This building houses all the FirstRand group’s offices, such as Rand Merchant Bank, FNB Private Clients and FNB Online. Whereas the private sector is the biggest factor in the banking sector, the state is moving to create publicly-owned banks. Post Bank, a division of the South African Post Office, is far advanced in its application for a full banking licence and a further two state banks are planned: Ithala (currently an enterprise funder in KwaZulu-Natal) and a Human Settlements Development Bank, which will focus on housing for poorer households and statefunded housing projects. This may have relevance for a province such as the Eastern Cape, which has a large rural population. Several new licences for banks are in the pipeline, with the first of these being a digital bank. The banking licence issued in 2017 to Take Your Money Everywhere (Tyme, by Commonwealth Bank of Australia) is the first to be issued since Capitec was granted a licence by the South African Reserve Bank in 1999. Capitec is now a major player on the South African retail banking scene and has 117 branches or ATMs across the Eastern Cape, including Bizana and Lusikisiki. It now merits inclusion in a new retail “Big Five”, with Standard Bank, Absa, FNB and Nedbank. In terms of assets, the five biggest banks are Standard Bank, FirstRand (which owns FNB), Absa (which is part of Barclays Group Africa), Nedbank and Investec. According to the Reserve Bank, this group had 89% of market share in 2015. Another applicant for a new banking licence is Discovery, an existing giant on the JSE. With a market value of R83-billion and a wide range of products and services, it already has access to millions of customers. Life insurer MMI Holdings is entering a partnership with African Bank to enable it to start taking deposits and loaning money. ONLINE RESOURCES Association for Savings and Investment South Africa: www.asisa.org.za Auditor-General of South Africa: www.agsa.co.za Chartered Institute for Government Finance, Audit and Risk Officers: www.cigfaro.co.za Eastern Cape Development Corporation: www.ecdc.co.za Financial Services Board: www.fsb.co.za 59 EASTERN CAPE BUSINESS 2018