Chamwe Kaira
9 May 2008
Windhoek — The re-entry into Namibia by South Africa's biggest retail bank, ABSA, is expected to shake the local banking market currently dominated by Standard Bank, Nedbank, FNB and Bank Windhoek, a senior treasury official told the Economist this week.
ABSA has been granted a provisional banking licence by the Bank of Namibia. The Economist established that the bank has already dispatched a team into Namibia to prepare for the bank's roll out.
"I don't think it will be business as usual. The banks have to think hard and strategise," said the official, who did not want to be named because of his involvement in the granting of the licence.
The ABSA Group confirmed this week; almost two months after the Economist broke the story, that the company was entering the local market with the Barclays Bank.
"We can confirm that the Bank of Namibia has granted a provisional banking license to Absa. This is the first step in pursuing the possibility of entering the Namibian banking market," Maxwell Pirikisi, Head of Corporate Affairs at ABSA Africa, told the Economist from Johanneburg.
ABSA, which controls South Africa's biggest retail bank, is now in the process of acquiring a full licence. It will become the fifth commercial bank to operate in the country.
Outside of South Africa, ABSA operates in Angola, Tanzania and Mozambique.
ABSA owned a 34,4% shareholding in Bank Windhoek through Capricorn Investment Holdings until November 2006 when it was bought out.
The central bank's assistant governor and head of financial stability, Ipumbu Shiimi said in an interview that the provisional licence will run until October this year, by which time ABSA is expected to have meet all the conditions needed to acquire a full licence.
"If we are satisfied with them, we will grant them a full licence," Shiimi said, adding that existing banks have not been informed of ABSA's re-entrance.
"It is not our duty to inform them," he said.
Shiimi also disclosed that the central bank has approached Cabinet to have the conditions needed in to establish a bank in the country amended. At the moment, a minimum of N$10 million is needed to establish a bank.
"This was enacted 10 years ago. In the new law, there will be no figures mentioned so that the Bank of Namibia can decided from time to time the minimum for establishing a bank. This is because it is very difficult to change the law," he said.
Pirikisi said that the banking group still has a lot of work to do before it acquires the full licence.
"At the moment, we cannot say the amount we are going to invest in Namibia. It is still early days," said Pirikisi.
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