LIFESTYLE | August 25, 2017 10:31

Eyeing Capitec's pie, CBA-owned TYME is close to securing SA bank licence

JOHANNESBURG -- Commonwealth Bank of Australia (CBA) is expected to soon have a banking presence in South Africa as its subsidiary TYME hones in on acquiring a licence from the Reserve Bank before year-end. TYME, a money transfer disruptor in South Africa, was quietly acquired in January 2015 by CBA. TYME previously shot to prominence for helping to install the likes of MTN's mobile money solution which was also accessible in Pick n Pay and Boxer stores. (MTN shut down its mobile money service last year though amid general weak demand for mobile money in South Africa. The shutdown followed a similar move by Vodacom to also close its mobile money business in South Africa.) CBA, however, has still seen the value in TYME by describing the South African unit as a “global leader in designing, building and operating digital banking systems”. On the TYME website, CBA also says TYME gives it a footprint in emerging markets, making this an interesting play. The further revelation in a Bloomberg article that TYME could have a banking licence before the end of September is another sign of how South Africa’s banking sector is heating up. The fact that billionaire Patrice Motsepe has now acquired a 10% stake in CBA-owned TYME is a further indicator that the SA banking licence is imminent. Apart from TYME, insurer Discovery and the South African Post Office are also in the process of attaining banking licences. It will be interesting to see how Capitec – recently voted the best bank in the world by Lafferty – will react to an impending market entry from CBA’s TYME especially as the latter has expertises in digital money transfer technology. Banking in South Africa is about to get very interesting. – Gareth van Zyl

By Renee Bonorchis

(Bloomberg) — African Rainbow Capital Ltd.'s banking partner is close to getting a license that it wants to use to challenge the dominance of South Africa's biggest lenders.

The Commonwealth Bank of Australia has said it will sell 10 percent of Tyme, a Johannesburg-based lender that allows customers to access funds through their mobile phones, to billionaire Patrice Motsepe's African Rainbow Capital after buying the business in 2015. Tyme was granted a provisional license by the South African Reserve Bank last year.

"The license is expected before the end of September," Johan van der Merwe, co-chief executive officer of African Rainbow Capital, said in an interview in Johannesburg on Thursday. The regulator is looking at the cloud-based system that ARC's fintech partner is using to make sure it works before granting the full license, he said.

South Africa's four biggest banks, including Standard Bank Group Ltd. and FirstRand Ltd., haven't had to face competition in the consumer market since Capitec Bank Holdings Ltd. started more than 15 years ago. Now, the central bank has three provisional licensees, Tyme, insurer Discovery Ltd. and the South African Post Office.

Disrupting Banks

This comes as the country's ruling party pushes for the creation of a state-owned bank to boost lending to the majority black population and businesses that the African National Congress has said have been excluded from the banking system.

"The South African banking environment is due for a bit of disruption," van der Merwe said. While Capitec has been able to play that role, the soon-to-be licensed lender will be a "disruption over and above that," he said.

African Rainbow Capital plans to raise 4 billion rand ($303 million) selling shares in its investment unit to selected investors. The sale will be followed by a listing on the Johannesburg Stock Exchange next month that will give African Rainbow Capital Investments a market value of about 8.5 billion rand. The unit will have 2 billion rand in cash for future purchases, van der Merwe said.

Description of TYME on its recently redesigned website:

In January 2015, the Commonwealth Bank of Australia (CBA) acquired 100% of TYME. This acquisition is a logical continuation of CBA’s strategy to pursue capability led growth outside Australia and one that reinforces CBA’s core strength in innovation and technology. There is a natural alignment starting with TYME’s vision of financial inclusion and CBA’s vision to excel at securing and enhancing the financial wellbeing of people, businesses and communities.

CBA’s Chief Executive Officer, Ian Narev said: “The strength of our business enables us to invest for the long term. We bought new capability, through the acquisition of TYME, a South African based global leader in designing, building and operating digital banking systems. TYME gives us new opportunities in our emerging markets footprint, as well as providing capability to enhance innovation in our core markets."