Discovery clears first hurdle for own bank

Cape Town - Discovery [JSE:DSY] on Tuesday cleared the first hurdle to start its own bank in South Africa after the Registrar of Banks gave it permission to establish a banking presence in the country.

It said in a statement to shareholders that authorisation was given in terms of Section 13(1) of the Banks Act 94 of 1990, subject to certain conditions.

Without elaborating, Discovery said it has 12 months to fulfill the said conditions and obtain its final approval in terms of Section 17 of the Banks Act. The grant of a banking license pursuant to section 17 is also subject to the approval of the Registrar of Banks.

In August Discovery said it hired a team of bankers as it stepped up efforts to create a new lender.

“We’re flat out with the infrastructure and the regulatory process for banking,” CEO and co-founder Adrian Gore told Bloomberg in an interview in Johannesburg. “We’ve got the capital, we’ve hired bankers, we’re building substantial systems. We want to make an offering that’s relevant and can win market share.”

READ: Discovery gets ready to move into banking

Gore said banking may boost future earnings.

Discovery will come up against five banks controlling more than 89% of South African banking assets and at least 16 other companies and 15 local branches of international banks offering services from private banking to wealth-management services and unsecured lending, according to Bloomberg.

Discovery shares were changing hands 2.24% lower at R112.18 in late afternoon trading on the JSE.

Read Fin24's top stories trending on Twitter: Fin24’s top stories