NEW WA­TERS

Finweek English Edition - - Companies & markets - SHAUN HAR­RIS

AT LEAST THIS BANK CAN CLAIM TO BE a sur­vivor. Mer­can­tile strug­gled through the small bank crises and took the knocks when South Africa’s other small banks were lin­ing up to hand back their li­cences. Now, af­ter a tough few years – when it ap­pears many for­mer clients de­cided pay­ing back credit wasn’t a pri­or­ity – it’s look­ing in much bet­ter shape. Sur­vival is thanks largely to Caixa Geral de Depósi­tos SA, the Por­tuguese gov­ern­ment-owned bank that moved in as ma­jor­ity share­holder and re­cap­i­talised Mer­can­tile. But now that it’s back on its feet – as strong growth in earn­ings, ad­vances and de­posits seem to in­di­cate – Mer­can­tile is re­claim­ing its for­mer charm as a ser­vice-ori­en­tated niche bank and spread­ing fur­ther into some cor­po­rate, mainly card-driven, op­er­a­tions.

For ex­am­ple, we hear un­con­firmed re­ports that Mer­can­tile is in bed with one of the large life com­pa­nies un­der­writ­ing a new sav­ings prod­uct. This share will re­main spec­u­la­tive in the staid bank­ing sec­tor for some time, but it’s worth a look. Sur­vivors tend to come back stronger. OP­POR­TU­NI­TIES • CA Rat­ings re­cently up­graded its long-term rat­ing on Mer­can­tile, and its share price has been mov­ing up ever since. Direc­tors have been buy­ing shares, nor­mally an en­cour­ag­ing sign. RISKS With more than 90% of its eq­uity held by its ma­jor share­holder, liq­uid­ity is like the Kala­hari on a hot day. Mer­can­tile will be chas­ing “legacy” bad debts for a long time.

MER­CAN­TILE BANK HOLD­INGS

Source: I-Net Bridge

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