* Deal boosts Absa market share in unsecured lending
* Absa to also extend credit to Edcon customers
By Tiisetso Motsoeneng and Agnieszka Flak
JOHANNESBURG, June 6 (Reuters) – South African bank Absa
will pay $1.2 billion for the store credit card
business of unlisted domestic retailer Edcon, it said on
Wednesday, bulking up its presence in the high-margin but
riskier unsecured lending market.
Under the deal, Absa, majority-owned by Britain’s Barclays
Plc, will also extend credit and sell other financial
products to the nearly 4 million customers of South Africa’s
biggest clothing retailer.
Banks in Africa’s top economy have been pushing into the
lucrative unsecured loan market, which relies solely on the
customer’s promise to pay back debt, to offset weak corporate
demand for credit.
However, household debt stands at a dangerously high level
of 70 percent of disposable income, and the central bank fears
that may get worse as banks expand into the sector.
Edcon’s store card business operates primarily in South
Africa, with smaller operations in Botswana, Namibia, Lesotho
and Swaziland.
Absa, South Africa’s biggest retail bank, which competes
with Standard Bank, Nedbank and FirstRand
, said it also planned to buy the business in
neighbouring countries. The deal should close in the second half
of the year.
Continued…
