| Wed 21 Nov 2001, 0:00 | | Nedcor Limited - Empowerment Groups And Trade Unio |
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into
Peoples Bank
Media Release
21 November 2001
Empowerment groups and trade unions to invest R557 million into
Peoples Bank
Nedcor will undertake the largest ever black empowerment initiative in the
banking industry with the sale of 30 percent of Peoples Bank to two broad
based empowerment groups.
The new shareholding structure will complete Peoples Bank's evolution from a
division of Nedcor Bank to an independent bank operating as a subsidiary
within the Nedcor group. The restructuring will facilitate the possible
stock market listing of Peoples Bank.
Nedcor announced today that 10 percent of Peoples Bank has been sold to the
Progressive African Investments Group Ltd (PAI consortium), bringing the
total empowerment holding to 30 percent. The members of the PAI consortium
comprise the Progressive Youth Investment Company Ltd, Africa Milestone
Investments Ltd, and Black Management Forum Investments.
An agreement in principle was reached in September last year for an
empowerment consortium led by the Brimstone Investment Corporation Ltd to
acquire 20 percent of Peoples Bank. This agreement has now been finalised
and the necessary funding secured. The members of the Brimstone consortium
include the investment arms of trade unions NUMSA (National Union of
Metalworkers of SA) and SARHWU (South African Railway and Harbours Workers
Union), and community groups The Disability Employment Concerns Trust, The
National Stokvels Association of SA, and WDB Investment Holdings (Pty) Ltd.
The two empowerment groups will invest R557 million in Peoples Bank,
implying a value for the bank of R1.9 billion. Peoples Bank is the tenth
largest bank in South Africa with assets of R8 billion. It focuses on
offering affordable and accessible financial products including mortgages,
loans, deposits, insurance and banking products.
Chief executive of Nedcor, Richard Laubscher, said: "Nedcor is delighted at
today's announcement which makes Peoples Bank South Africa's largest
empowerment bank. The emerging middle class, the underbanked and the
entrepreneurial sectors are important ones and I am confident that we now
have the management and the partners to make a success of Peoples Bank.
"This announcement should be seen as part of Nedcor's strategy to be strong
in all the key consumer markets. Nedbank is well established at the top end
of the market. Last week we teamed up with Old Mutual Bank to tackle the
broader middle market, and Peoples Bank is evidence of our determination to
be the leading player in the emerging middle class."
Chief executive of Peoples Bank, Lot Ndlovu, said: "Peoples Bank is the
first truly empowered bank with critical mass. Its management and staff are
fully representative of South Africa's people, it participates extensively
in community projects, and the agreements signed with our new empowerment
shareholders extends their influence beyond the boardroom through to
management and the commercial growth of the business. This total empowerment
focus puts Peoples Bank in a firm position to deliver results in its target
markets."
Spokesperson for the PAI consortium, Campbell Bomela, said: "We see this as
true empowerment. It has wide participation from trade unions, management
groups, disability groups and women's groups. And importantly, it gives us
an opportunity for skills transfer as four of the senior managers in Peoples
Bank come from the PAI consortium."
Spokesperson for the Brimstone consortium, Professor Jakes Gerwel, said:
"This is one of the most important empowerment deals in the financial
services sector. It is structured in a way favourable to the empowerment
shareholders. What is also important is that the service market, the
emergent and previously underbanked sectors, is itself part of broader
empowerment."
Chief executive officer of the NUMSA Investment Company (Pty) Ltd, Tony
Kgobe, said: "This is an exciting development, especially as Peoples Bank's
positioning is exactly that of the NUMSA members. We see this as providing
financial services and products to enhance the benefits to our members and
we are pleased to be a part of this empowerment process and transfer of
skills."
An announcement will be made later this week regarding the external funding
arrangements of the investment by the empowerment groups, including a put
option on Nedcor Bank in the event of certain performance criteria not being
met.
Peoples Bank has become a powerful brand in its chosen markets, said Ndlovu,
and this has set the platform for future growth and the launch of exciting
new products next year. "The brand revolves around the key values of Peoples
Bank which are respect, integrity, passion and innovation," he said. Ndlovu
added that Peoples Bank hopes to list on the stock exchange within five
years.
The empowerment shareholders have commercial agreements with Peoples Bank in
terms of which contributions to the bank's business will be rewarded by
Peoples Bank on an agreed basis.
Since Lot Ndlovu is an executive director of Nedcor and Nedcor Bank, and he
together with three other members of Peoples Bank's senior management team
are shareholders of Africa Milestone Investments Ltd (AMI) which holds four
percent of Peoples Bank, a resolution will be proposed to Nedcor
shareholders at the next annual general meeting to ratify AMI's
participation in the transaction.
Peoples Bank has strategic growth alliances with Old Mutual Group Schemes
and the JD Group. These alliances provide new distribution channels,
products and client bases. Peoples Bank also has an alliance with Capital
One Corporation which provides information-based credit scoring systems.
The effective date of the empowerment transaction is January 1 2002. Peoples
Bank is awaiting the necessary regulatory approvals and the completion of
certain other conditions.
Notes to Editors:
About the PAI consortium
The consortium comprises a wide grouping of empowerment organisations. The
Progressive Youth Investment Company Ltd is made up of a number of student
organisations including the South African Youth Development Trust. Africa
Milestone Investments Ltd comprises the SA Council for the Aged, SA
Association of Youth Clubs, and the Adult Educators and Trainers Association
of South Africa. Black Management Forum Investments is an organisation of
black managers and professionals in the private and public sectors.
About Brimstone Investment Corporation Ltd
Brimstone is a leading empowerment group in South Africa. It was started in
1994 and listed as an investment trust with a diversified mandate in 1998,
but since then has become a focused financial services company.
About Peoples Bank Ltd
Peoples Bank was established in 1995 as a retail brand of Nedcor Bank Ltd
following its split from the South African Permanent Building Society, which
subsequently became Permanent Bank. After the incorporation of the
businesses of FBC Fidelity Bank, NedEnterprise (Nedcor's SME arm) and
Peoples Bank in 2000, Peoples Bank is today South Africa's tenth largest
bank. It has approximately one million customers, a national network of 73
branches, 150 points of presence in JD Group outlets, access to over 1000
ATMs, and 650 staff members.
About Nedcor Ltd
Nedcor has assets of R173 billion and provides corporate, commercial,
investment and retail banking. Nedcor covers the entire retail market with
its multi-brand strategy: Nebank Syfrets Private Bank is niched in the high
net worth segment, Nedbank is a major player in the upper and aspirational
markets, and through its alliance partnerships with Old Mutual, Pick `n Pay,
Imperial Bank and JD Group, has an expanding presence in the middle market.
Empowerment bank Peoples Bank is now well positioned in the emerging middle
class, underbanked and entrepreneurial sectors.
Issued by: Nedcor Media Relations
(011) 294 0371
