Finance Minister Pravin Gordhan must sign off Vardospan’s contentious buyout of Habib Overseas Bank’s South African assets
Vardospan’s buyout of Habib Overseas Bank’s South African
assets has to be approved by Finance Minister Pravin Gordhan, who is
involved in a legal dispute with the controversial Gupta family.
The transaction passed competitive muster last week, but still has to be signed off by the minister.
Vardospan, a joint venture between Cinq Holdings, a company controlled by Salim Essa, a close business associate of the Gupta family and Hamza Farooqui’s Pearl Capital, is proposing to acquire Luxembourg-based Pitcairns Finance’s interest in Habib Overseas Bank’s domestic operations.
Kuben Naidoo, deputy governor of the Reserve Bank and the registrar of banks, said on Monday he was considering an application for Habib’s change of ownership.
The transaction passed competitive muster last week, but still has to be signed off by the minister.
Vardospan, a joint venture between Cinq Holdings, a company controlled by Salim Essa, a close business associate of the Gupta family and Hamza Farooqui’s Pearl Capital, is proposing to acquire Luxembourg-based Pitcairns Finance’s interest in Habib Overseas Bank’s domestic operations.
Kuben Naidoo, deputy governor of the Reserve Bank and the registrar of banks, said on Monday he was considering an application for Habib’s change of ownership.
"If a company wants to acquire 15% or more of a bank,
they have to get permission from the registrar of banks," he said. "If
they seek to acquire more than 49% of a bank, they require the approval
of the minister of finance on the advice of the registrar."
Gordhan has approached the High Court in Pretoria for an order declaring that he cannot interfere with the decision of the big four banks to deactivate accounts belonging to the Gupta family’s Oakbay group of companies between December 2015 and June 2016. The family is expected to respond to the minister’s application on Friday.
Cinq and Pearl Capital were registered in July 2016, shortly after Standard Bank, Oakbay’s last major banking provider, closed the group’s accounts.
The Competition Commission approved Vardospan’s bid for Habib without any conditions last week.
Gordhan has approached the High Court in Pretoria for an order declaring that he cannot interfere with the decision of the big four banks to deactivate accounts belonging to the Gupta family’s Oakbay group of companies between December 2015 and June 2016. The family is expected to respond to the minister’s application on Friday.
Cinq and Pearl Capital were registered in July 2016, shortly after Standard Bank, Oakbay’s last major banking provider, closed the group’s accounts.
The Competition Commission approved Vardospan’s bid for Habib without any conditions last week.
Habib, which controlled domestic assets of just more than
R1bn by November according to Reserve Bank filings, targets both
individual and commercial customers, and is one of the 21 banks on SA’s
national payment system.
Farooqui declined to comment on Vardospan’s plans for Habib Overseas Bank.
"It would be inappropriate to comment on future strategy before the transaction has [been] completed," said Farooqui.
But he did not rule out taking on Oakbay as customers.
"We would approach every potential customer the same and do all the rigorous due diligence you would expect of any new potential customer," he said.
To gain the Reserve Bank’s approval, Vardospan would have to pass a "fit and proper persons" test, as it is seeking to buy more than 15% of the bank.
The test would include examining its fiduciary oversight capacity, as well as the background of the acquiring entity in terms of governance, integrity and soundness,
said Naidoo.
"The registrar’s office is also permitted to conduct fit and proper persons tests on key executives and certain nonexecutive directors of the bank.
"The registrar’s concerns in conducting these tests include safeguarding customers, ensuring the soundness and safety of the institution, the financial capacity of the entity — including during a crisis, the stability and strategy of the entity, and compliance with laws and regulations governing banks in SA."
Naidoo did not answer questions whether Essa would pass these tests given his ties to the Guptas. But Farooqui told Business Day his 14-year business partnership with insurer Old Mutual was severed because of the perceived reputational risk arising from his new venture with Essa.
Farooqui did not respond to questions on the Reserve Bank approval process.
Farooqui declined to comment on Vardospan’s plans for Habib Overseas Bank.
"It would be inappropriate to comment on future strategy before the transaction has [been] completed," said Farooqui.
But he did not rule out taking on Oakbay as customers.
"We would approach every potential customer the same and do all the rigorous due diligence you would expect of any new potential customer," he said.
To gain the Reserve Bank’s approval, Vardospan would have to pass a "fit and proper persons" test, as it is seeking to buy more than 15% of the bank.
The test would include examining its fiduciary oversight capacity, as well as the background of the acquiring entity in terms of governance, integrity and soundness,
said Naidoo.
"The registrar’s office is also permitted to conduct fit and proper persons tests on key executives and certain nonexecutive directors of the bank.
"The registrar’s concerns in conducting these tests include safeguarding customers, ensuring the soundness and safety of the institution, the financial capacity of the entity — including during a crisis, the stability and strategy of the entity, and compliance with laws and regulations governing banks in SA."
Naidoo did not answer questions whether Essa would pass these tests given his ties to the Guptas. But Farooqui told Business Day his 14-year business partnership with insurer Old Mutual was severed because of the perceived reputational risk arising from his new venture with Essa.
Farooqui did not respond to questions on the Reserve Bank approval process.
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