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MMI, African Bank partner to expand fin services

Jun 12 2017 15:41
Lameez Omarjee, Fin24

Johannesburg – Financial services group MMI Holdings [JSE:MMI] on Monday announced a new partnership with African Bank.

According to an investment note the financial services group explained that the agreement, which is yet to be approved, will see both entities expand their financial service offerings.

African Bank will provide credit facilities to MMI clients which will be offered through MMI’s existing sales channels. “African Bank will be the exclusive provider of consumer credit products to MMI, for solutions falling within its product range,” said the group.

This will be made possible through a separate company 49% owned by African Bank and 51% owned by MMI, African Bank explained in a separate investment note.

African Bank will also act as a sponsoring bank to facilitate other banking services such as deposit-taking and other transactions MMI plans to offer its clients.

In turn MMI’s insurance products, appropriate for the relevant target market, will be made exclusively available to African Bank’s customer base, through its branches and other distribution channels.  

MMI intends to build a loan book in excess of R10bn over the next five years. The insurance offering for African Bank is intended to generated premiums over R1bn over the next five years.

Profits from both operations are to be shared equally, 50:50, between the partners, said MMI.

The insurance venture will go live from the second half of the year and the lending activities are expected to become fully functional by the first half of 2018.

City Press recently reported that African Bank had spent R72m on building a transactional banking unit, with the aim to double its client base over the next three years. This is to be launched early next year.

READ: Reserve Bank lifts lid on African Bank demise

An investigation last year found the bank had collapsed in 2014 as a result of negligent conduct. The Myburgh Report on African Bank Limited, released by the South African Reserve Bank (SARB), showed that the bank did not make prudent and appropriate provisions, nor did it manage reasonably foreseeable risks.

The bank relaunched in 2016 with an equity base of R10bn and a cash position of about R24bn.

The bank is a subsidiary of African Bank Holdings Limited (ABHL), an unlisted company with shares privately held by the SARB, the Government Employees Pension Fund, Barclays Africa Group, Nedbank, FirstRand Bank, Investec Bank, Standard Bank of SA and Capitec.

MMI’s shares were trading at R20.01 at 14:00. 

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