Portuguese government gives green light for sale of South Africa's Mercantile Bank
The official process of the sale of Mercantile Bank by Caixa Geral de Depósitos (CGD), a Portuguese state-owned banking and financial services group, can now proceed following legal approval by the Portuguese government.
Mercantile is 100% owned by CGD, which announced in March 2017 that it intends to sell the South African bank as part of a restructuring plan required and approved by the European Commission. The reduction of its foreign assets forms part of a CGD agreement with the Commission.
On Friday the Portuguese government, via its Council of Ministers, signed the decree required to begin the official process of privatising or selling an asset owned by CGD as a Portuguese state-owned entity. The country’s president now has to promulgate this decree within a period of 30 days, after which the formal process of selling Mercantile Bank will officially begin.
As part of this formal process, the interested parties will be brought into contact with CGD’s financial advisers, who have already been appointed to facilitate the sale, namely the Deutsche Bank South Africa and Caixa Banco de Investimento Portugal.
Different phases
The process will consist of different phases and is expected to take at least one year to complete. During that long process the Mercantile Board, CGD and ultimately the government of Portugal will look into potential buyers which have a suitable ethical profile and reputation, as well as the ability to expand Mercantile’s business model through supporting its existing and future client base and the development of current staff and management.
Mercantile wishes to reiterate that its board will only support a decision that benefits all of its stakeholders, the most important of whom are its staff and clients.
Karl Kumbier, CEO of Mercantile, says the bank is not reliant on any additional capital funding from CGD and the sales process should not affect Mercantile’s operations.
“We will continue to focus on our strategy to become the number one business bank in SA. Mercantile is confident that we will find the right partner who will not only give us the opportunity to expand our own business further, but also to continue to grow the businesses of South African entrepreneurs,” said Kumbier.
Over the past few years, Mercantile has already achieved outstanding results through the successful implementation of its growth strategy. As the largest of SA’s small banks by assets, Mercantile has seen its assets grow from just over R6bn in 2011, to over R13bn currently.
It also holds R9bn in deposits, compared to deposits of R4.2bn in 2011. This growth in the size of its business also coincided with increases in profit of more than 15% per annum over the past three years.
Mercantile is one of only two South African banks to be upgraded by Moody’s this year.
