Grindrod hangs on to grant customers
Grindrod is seeking to retain as many as possible of the 5.4 million bank accounts it is set to lose following SA’s decision to appoint a new distributor of welfare grants, tempting recipients with affordable banking services like EasyPay.
The government has asked the South African Post Office to handle more than $10-billion (about R135-billion) of annual social security payments after cancelling an arrangement with Net1 UEPS earlier this year. Grindrod’s banking arm had a partnership with Net1’s Cash Paymaster Services, in which millions of welfare beneficiaries who used banks, were automatically Grindrod clients because that was how they accessed their cash.
Remgro, the investment vehicle of Johann Rupert, owns about 23% of Grindrod, which also has investments in transportation.
Grindrod Bank’s profit is likely to decline 20% if the company cannot retain welfare recipients as customers in some capacity, according to the division’s managing director David Polkinghorne. EasyPay accounts charge customers monthly fees of R6.91, lower than welfare recipients are currently paying to Grindrod and CPS combined.
“This part of the business can still become very important for the bank,” Polkinghorne said in an interview on Thursday. “If welfare customers decide to open permanent accounts, we can do a lot more for them.”
Grindrod Bank, which mainly focuses on corporate finance and lending, investments and property, started its retail arm seven years ago when it struck the CPS partnership. The welfare contract has since been disputed and was ruled by the Constitutional Court in 2014 to have been incorrectly awarded.
Grindrod Bank earned 50c per account per month under the CPS agreement.
Separately, Grindrod Bank is one of four preferred bidders for Portuguese-owned Caixa Geral de Depositos SA’s Mercantile Bank. If the company and partner Arise are successful, Grindrod will bolster its financial services offering and have almost R13-billion more in assets under management. —