FNB expands into Mozambique

This follows FirstRand Bank Holdings's acquisition of 80% shareholding in Banco Desenvolvimento e Comércio - a bank based in Maputo - from majority shareholder Montepio Geral Group from Portugal and other shareholders.

The R139m deal also includes the acquisition of 19.96% shareholding in Interbancos, an equivalent of South Africa's Bankserv, which provides card acquiring devices, ATMs, cellphone banking and clearing of transactions between banks.

BDC has been operating in Mozambique since 2001, and turned a profit in the 2006 financial year. The bank operates four branches and three off-site ATMs in Maputo, as well as a micro branch in Matola.

FNB will re-brand BDC's branches and intends to increase its footprint in Mozambique through the expansion of its branch and ATM networks.

FNB CEO Michael Jordaan says acquiring a significant shareholding in BDC provides a clear sign by the banking group to invest in Mozambique and to contribute to the development of the Southern African country.

"With a strong presence already in Botswana, Lesotho, Namibia and Swaziland, Mozambique's geographical proximity to South Africa presents a natural space to expand and gain cross-border experience," says Jordaan.

He explains that the transaction is being concluded on the back of sound relations between South Africa and Mozambique, underpinned by growing ties in trade, investment, tourism, migration and security between the two countries.

"The acquisition of a bank of this size is in line with the Group's accelerated greenfields strategy, where for acquisition purposes the Group favours small operations that have entrepreneurial initiative, intellectual flair and local market contacts that act as beachheads to look for bigger opportunities," says Jordaan.

He adds that the retention of a local minority stake in the form of GCP serves to retain strong local market knowledge and relationships.

FNB Mozambique will focus on providing financial services to the consumer, commercial and small business market segments.

These include core banking and financial investment products, card services as well as access to electronic banking and self-service channels.

The launch of FNB Mozambique increases FNB's presence outside South Africa to five countries. The bank's African subsidiaries are performing well, with profit before tax up 27% for the six months ended December 31 2006.

FNB became the first South African bank to launch cellphone banking across countries when it debuted cellphone banking in Botswana last year through FNB Botswana, and later in Namibia. Cellphone banking is increasingly becoming an important banking channel in Africa.