New bank in South Africa gets the green light – BusinessTech

Old Mutual has received approval from the Prudential Authority to establish a bank in South Africa, which is expected to launch by year-end.

Old Mutual said that it’s pleased to announce that, following a stringent regulatory review of its application in terms of Section 16 of the Banks Act 94 of 1990, as amended (“Banks Act”), the Prudential Authority has granted the group approval to establish a bank subject to certain licence conditions.

“This approval, in terms of Section 17 of the Banks Act, allows Old Mutual to proceed to the next critical stage in the process of establishing a bank,” the group said.

Old Mutual noted it would now formally transition from ‘bank build mode’ and enter into a strict and rigorous industry testing phase with selected bank partners.

“Upon successful error-free testing, the new OM Bank will fully integrate into the National Payments System,” it added.

In its financial results for the year ended 31 December 2023 (FY2023), the group said that its bank build remains on track to be launched before the end of 2024, which is still the case.

The next step for Old Mutual is the section 17 submission, which allows them to notify the industry via the Payments Association of South Africa that they intend to test the National Payments system in the latter half of 2024.

The Old Mutual Bank is one of four banks launching in South Africa.

It will be joined by the Young Women in Business Network (YWBN) Mutual Bank, the state-owned Postbank and SA Innovative Financial Services Cooperative (SAIFSC) from the Department of Women, Youth and People with Disabilities.

The Group noted in its results that, despite a challenging operating environment characterised by high inflation, elevated interest rates and muted economic growth in South Africa, the group saw sales growth of 17% in its key life segments, with its growing market share profitability in its key markets.

“The approval to establish a Bank is a material catalyst in our strategic delivery journey.

“It accelerates the fulfilment of our strategic choice to build an Integrated Financial Services business and further strengthens our victory condition to be our customers’ first choice to sustain, grow and protect their prosperity,” said Old Mutual CEO Iain Williamson.

The group already has existing lending and transactional products – an unsecured lending product and the Old Mutual Money Account – with the latter handled through a partnership with Bidvest Bank.

Old Mutual said that the unsecured lending solution, in particular, is already a strong contributor to group profitability.

“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. 

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

Read: R53 billion blow to South Africa’s big banks in 2024

Source link