Changing up

Were it not for apartheid-era import-protection policies and, later, sanctions increasingly isolating SA from the world, Sasfin CEO Roland Sassoon would perhaps today be minding Sasstex, the family textile trading business.

But these policies made Sasstex’s business “unviable”, Sassoon says, and pushed it towards its first reinvention: providing trade finance to its entrepreneur clients in the late 1960s.

“It wasn’t a very big business,” says Sassoon, explaining that Sasstex had a few hundred customers at the time it changed its strategy and its name to Sasfin — a far cry from the 50,000 wealth, private and business clients the group has today.

The story of the banking and wealth group’s humble beginnings is now the stuff of business legend, but very little is known about its early days as a banker.

“It wasn’t that difficult [getting a banking licence],” says Sassoon, but he points out that few small banks from that era — the late 1990s — succeeded. It had applied for, and was granted, a banking licence in the middle of spectacular banking failures.

While Sasfin reinvented itself yet again as a deposit-taking bank for its trade finance clients in July 1999, FBC Fidelity Bank and New Republic Bank came under severe pressure and were placed into curatorship.

Nedcor, the precursor to the Nedbank Group, later bought FBC’s assets out of curatorship, and New Republic was purchased by Saambou Bank and PSG. Saambou itself collapsed three years later. “We survived for two reasons: we had been lending to small businesses for 50-60 years,” says Sassoon. “[And] we built special relationships with customers.

“They don’t worry about what is written in newspapers because we talk to them; we engage with them.”

Sassoon’s point about newspapers is especially important. New Republic’s curatorship came after a run on the bank following Mawenzi Resources’ widely reported refusal to buy the bank after a leaked KPMG report left a stench over the bank’s assets. Mawenzi was led prominent businessman Mzi Khumalo.

Michael Sassoon, head of Sasfin’s wealth and capital business and Roland Sassoon’s expected successor, says the banking group is more conservative with its lending and holds more capital than other banks.

Patrice Rassou, head of equities at Sanlam Investments, agrees: “It remains well capitalised and never took too much risk.

“The bank has remained niched and provided services mainly to small business — an area where many of the big banks did not want to venture.”

Rassou says Sasfin has delivered an “excellent” 15% total return to investors since it secured its banking licence in 1999.

This was on the back of phenomenal growth in assets. With a mere R288m at the end of June 1999, the month before it was granted the banking licence, the group grew its assets to R11bn in the year to June 2016.

Its loan book of R156.1m has risen to R6.4bn.

The addition of a wealth management arm through the 2000 acquisition of stockbroker Frankel Pollak and the 2001 buyout of Regal Treasury Securities — a subsidiary of Regal Treasury Private Bank, another failed smaller bank — helped push Sasfin’s funds under management and advisement to R108bn.

It recently launched a transactional banking offering to its clients, but profitability declined during the year.

“We reinvested in the business,” says Michael Sassoon. “Profitability will increase over the coming years as we roll out the [offering].”

The younger Sassoon says the transactional banking business signed up more customers this financial year, but not as many as the bank would have liked.

All other business lines, except commercial solutions, experienced profit growth of more than 18%.

The commercial solutions business has made a recovery from the interim period’s 2.6% decline in profitability, and this is expected to improve after the group offloaded 70% of its shares in Sasfin Logistics — renamed Imperial Sasfin Logistics (ISL) — to Imperial.

Roland Sassoon says the ISL deal was motivated by the desire to grow it into a larger business.

“We’re very happy to be the junior partner in the joint venture,” he says, adding that with Imperial’s expertise clients now have access to the entire spectrum of services for their import and export needs.

Rassou says the partnership with Imperial bodes well for the group.

“[The group] is also expanding its transactional banking offering, which should further enhance its wealth management offering,” he says. “The business has made the acquisition of Fintech, which allows it to further consolidate its position as a leader in office equipment finance.”

Subsidiary Sasfin Capital also acquired Benal Property Investments during the financial year, gaining access to a portfolio of six industrial properties around Gauteng and securities listed on the JSE. Michael Sassoon hints at more acquisitions, though he says he is unable to discuss them.

‘‘ WE BUILD SPECIAL RELATIONSHIPS WITH CUSTOMERS. WE ENGAGE WITH THEM ROLAND SASSOON