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The Cape’s financial landscape
Cape Town is often viewed as the hub of money management – an image obviously enhanced by the fact that two of the country’s most iconic savings institutions, Sanlam and Old Mutual, have deep roots in the city. Then there’s also the fact that Stellenbosch-based investment giants like Remgro (which nurtured international tobacco and luxury goods brands) and PSG (which birthed the now highly successful Capitec Bank) have also pulled off inspired financial engineering over the decades.
Now that Cape Town plays host to the headquarters of so many large asset management firms (and small boutiques) – including Allan Gray, Coronation Fund Managers, Prescient and Cadiz – there is a strong sense that Cape Town remains a critical financial hub in the SA economy.
But Cape Town has endured a colourful history in the broader financial services arena over the last thirty years – particularly the city’s specialist banking offering that has been whittled down through vigorous corporate action. There were the rather painful events like the demise of Cape Investment Bank and the collapse of the Masterbond Group. But there was also a time in the mid-to-late nineties when Cape Town was a hive of financial services activity.
Readers may recall that Cape Town had its very own property funding dynamo in form of Cape of Good Hope Bank, which sadly was incorporated into its parent company Nedbank after a merger with another Cape Town financial services stalwart Board of Executors (BoE.) In fact BoE, at one stage, seemed to come very close to forming a new banking and insurance (bancassurance) constellation that would have challenged the financial stalwarts on the JSE.
The BoE story is worth revisiting. It’s a convoluted tale that had its genesis in a hostile takeover attempt by banking giant Absa of Paarl-based Boland Bank. Retail tycoon Christo Wiese, however, rode to Boland’s rescue, and soon embarked on initiatives to move the little bank out of its rural mindset and into a more sophisticated service offering (which included the acquisition of Boland Financial Services, which later became Mettle.)
Wiese – all the time holding out hope for the launch of a low cost retail banking model under Pep – then shifted a new look Boland towards former building society NBS, leading to the Boland-NBS merger. Wiese then steered his newly merged entity to BoE – then headed by powerful executive troika of Bill McAdam, Phil Biden and Tom Boardman – clinching a merger in 1998.
BoE, unfortunately, over -extended itself (including being involved in the Century City development,) and the ensuing small banking crisis of 2000/2001 saw the banking group merged with Nedbank to form what is today known as Nedcor. Interestingly BoE’s Boardman was appointed CEO of Nedcor, and he played a key role in reversing the bank’s fortunes (while his other two compatriots McAdam and Biden later moved into asset management and corporate advisory services respectively.)
At the same time it was also fun and games in Stellenbosch, where Absa was again painted as the villain in its bid to gain control of PSG. Fortunately for PSG there was a ‘white knight’ in form of Steinhoff International prime mover Markus Jooste. But Absa did walk off with PSG Investment Bank, and Jooste became a significant minority shareholder in PSG…and eventually wangled a 20% stake in PSG for Steinhoff.
The events of the late nineties and early noughties probably did dampen enthusiasm for financial services ventures in the Western Cape. But the prime movers of that time certainly have not shied away from trying their luck again in financial services.
PSG was instrumental in the development and early funding of Capitec Bank – a venture that has carved out a lucrative niche in affordable banking at the expense of the large banks. PSG has also perfected its long-term plans to form a wealth management hub in form of PSG Konsult, which was listed on the JSE last year.
Wiese also appears to be tilting at niche financial services again. He holds exposure to secured lending in the UK and specialist financial structuring via Tradehold, and is involved – via Brait – in micro-lending specialist Southern View. Wiese has also lately become involved in ConvergeNet, a newly formed investment company, which rumours suggest could include a substantial financial services offering in the future.