A new bank is entering South Africa as a major one exits
South Africa’s banking sector is poised for major changes, with Old Mutual introducing a new bank and HSBC exiting the country.
Significant shifts are expected in South Africa’s banking sector next year, with Old Mutual launching a new bank and HSBC exiting the South African market.
HSBC exiting
As reported by capetownetc, FirstRand Limited has confirmed that HSBC Bank plc will be transferring its clients, banking assets, liabilities, and also employees of its South African branch to FirstRand’s wholly owned subsidiary FirstRand Bank Limited (FRB).
UK-based HSBC has concluded an agreement to transfer its South African operations to FirstRand and Absa, marking its exit from the country.
The company is shifting its global focus to Asia. Their exit from South Africa’s banking sector is part of this global shift in focus.
FirstRand’s corporate and investment banking franchise, Rand Merchant Bank (RMB), will manage the transfer. Its aim is to complete the transaction during the fourth quarter of 2025.
Old Mutual opening a new bank
Old Mutual has announced that they have received the necessary regulatory approval to establish their new bank in 2025. The Prudential Authority has certified that its systems are fully operational.
“We are extremely pleased to have received the regulator’s go-ahead and look forward to shaking up the financial services space with new innovations and solutions.”
Old Mutual CEO Iain Williamson
Old Mutual will be launching its new bank in three stages. It plans to complete the public launch during the first quarter of 2025. Thereafter, Old Mutual will launch a campaign to convert existing money account customers. The launch of full-scale operations will be the final stage.
According to Old Mutual’s CEO Iain Williamson the integration testing has been completed. In addition, the connection to the national payments system has already also been completed.
Old Mutual’s bank’s main competitors include Absa Bank, FirstRand’s First National Bank, and Standard Bank. Additionally, the bank will also be competing against digital banks such as Discovery Bank.
The bank will primarily target affluent customers, according to Moneyweb.
Markedly, Old Mutual is Africa’s largest insurer by assets and it has developed the bank’s core functions within a previously allocated budget of R1.75 billion. The board has furthermore approved an additional R800 million to carry the project through to its official launch.
The insurer has appointed Clarence Nethengwe as the CEO-designate of the bank, effective from 1 November 2024.