| Wed 27 Jul 2005, 10:34 | | Nedbank's share ownership plan |
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Nedbank`s share ownership plan
Bank targets black clients
July 27, 2005
By Sherilee Bridge-David
Johannesburg - Nedbank hopes to win over thousands of new black clients by offering its shares to the public as part of its broad-based empowerment efforts.
Releasing details of Nedbank`s Eyethu Ownership Plan yesterday, Clive van Horen, the managing director of Nedbank retail banking services, said 9.5 million shares would be made available to new and existing black clients.
`We would be disappointed if only 10 000 clients took up the offer and delighted if we attract more than 1 million.`
Van Horen said that roughly half, or 1.5 million, of Nedbank`s existing clients were black.
The share sale to clients is valued at R560 million and represents 2.17 percent of Nedbank`s issued share capital.
It is the first time a local bank has offered black clients the opportunity to buy shares as part of a broader empowerment deal.
Van Horen said the bank had, in the past few months, experienced significant growth in its Mzansi account uptake, with Nedbank`s share of total Mzansi accounts opened moving from 6 percent to 8 percent in June.
Mzansi account holders, who are typically low-income earners, are invited - along with Nedbank, Old Mutual Bank, Pick `n Pay Go Banking and Peoples Bank customers - to sign up for the Eyethu shares.
The retail scheme opens in mid-August and promises a bonus share for every three Nedbank shares held at the end of a three-year period.
`This effectively translates into a 25 percent discount,` said Van Horen.
Participants would receive the full benefits of share ownership, including voting rights, dividend payments and, if the share price rose, a return on their investment, he said. Customers would also receive a capital guarantee, removing any downside risk should the share price fall.
Van Horen said the `catch` was the condition that participants must have or must open a primary account with the bank (into which their salary or wages must be paid) and that they held the shares for the full three years.
There was little risk for the bank itself. The shares, which would be acquired at market price, would be issued at a par value of R1 each.
All the money from the share purchases would be held in a trust for three years. The interest earned would be used to offset funding costs and to settle the R9.5 million loan that would be taken to buy the shares.
Nedbank shares rose 10c to R84.10 yesterday. The banks sector closed 0.18 percent higher.
The Eyethu Ownership Plan
Shares up for grabs: 9.5 million, representing 2.17 percent of the Nedbank Group.
Qualifying client profile: Black South African citizens (defined as Africans, Indians and coloureds) over the age of 18.
Conditions: Must hold or open a primary account, which must remain active with a minimum of five client-initiated transactions a month for a minimum of 36 months from the time the shares are purchased.
Eligible accounts: Savings, current, transmission or Mzansi accounts held with Nedbank, Old Mutual Bank, Pick `n Pay Go Banking and Peoples Bank.
Payment options: lump sum, buy-as-you-go or a combination.
Minimum investment: R50 a month under buy-as-you-go option.
Minimum lump sum investment per individual: R2 000.
Maximum investment per individual: R100 000.
Duration of offer: August 15 to November 15 2005
