Dobsonville is a newly middle-class part of Soweto, a sprawling suburb of at least 3m people south-west of Johannesburg. The area is packed with new houses, honking minibus taxis and tiny businesses, but few banks. Once, Absa was a staunchly white, Afrikaner bank. It waited until 1996 to open its Dobsonville branch, and another five years before opening another in Soweto. Two more are now planned, as Absa tries to reach new customers in the emerging black middle class.
Soon Barclays could be here instead. The British bank was forced out of apartheid South Africa in 1986 by angry consumers (especially students) in Britain, who accused it of supporting the white-minority government of the time. It has since returned to the country, where it has its African headquarters and a corporate-banking business. Last week, it confirmed that it wants a controlling stake in Absa, one of the country’s top retail banks. The bid is likely to cost over 20 billion rand, in cash. There are rumoured to be possible rival bidders, such as Standard Chartered, another British institution, which bought a South African online bank last year. So far, though, Standard Chartered has made no move to snatch Absa as well.
In fact, all South Africa’s big banks?Absa, Nedcor, FirstRand and Standard Bank?look alluring. All are locally owned and make healthy profits. Absa earned 4.4 billion rand in the year to March, 29% more than in 2002-03. The economy is buoyant, enjoying low interest rates, a booming housing market and a strong currency.
The market is ripe for growth. Some 13m, mostly black, South Africans lack accounts, but might be tempted if banks only tried. In places like Dobsonville, taxi drivers earn easily enough to have accounts, but only when a black woman, Innocentia Nkomo, became Absa’s branch manager in 2002 did anyone think to approach drivers working nearby. Around 50 are now among the branch’s best customers, with “platinum” savings accounts.
Gutto says Fagan’s case for his Holocaust victims was boosted by how “white, western states” viewed the Holocaust and also the strong Jewish lobby, particularly in the US.
Mrs Nkomo now eyes those who run other small businesses, such as fruit stalls and hairdressing salons. Many still keep their profits stuffed under the mattress or borrow from loan sharks. A new owner of Absa could ensure more of these people are attracted by making small changes. Cutting charges would be a start: at Absa it costs 25 rand every time a customer withdraws cash over the counter.
South Africa’s finance minister, Trevor Manuel, will have the final say over whether Barclays may have its prize. Bigger unions grumble that a foreign owner would take profits overseas, and want Mr Manuel to stick to a policy that banks be locally owned. He will probably be swayed more by the thought of a large inflow of foreign direct investment. Anyway, his boss, President Thabo Mbeki, has apparently already given the bid his blessing.
One other possible obstacle seems unlikely to stop a deal. Under the terms of an agreement between the country’s financial companies and the government, more of the equity in these firms must be passed into black hands, as part of “black economic empowerment”. Thus Barclays needs, if only for political reasons, support from Batho Bonke, a black-owned group that holds 10% of Absa’s shares. This week one of Batho Bonke’s owners, Tokyo Sexwale, gave glowing support to Barclays, calling the British bank’s putative bid “a strong vote of confidence in the financial and monetary system”. The people of Dobsonville would hope so too.
