Com­pa­nies &In­vest­ments

Finweek English Edition - - COMPANIES & INVESTMENTS - Bruce Whit­field

con­trols Ned­bank which, like its peer group, has de­vel­oped a sig­nif­i­cant mi­crolend­ing busi­ness on its own. Does that mean that Old Mu­tual is com­pro­mised?

Can­ter is very spe­cific that while mi­crolend­ing is presently un­der siege – there is still good money to be made for lenders into the sec­tor, but it’s not with­out its risks.

“We be­lieve (the cur­rent model) is on an un­sus­tain­able trend, we don’t be­lieve th­ese busi­nesses are go­ing down the tubes, but we can­not main­tain th­ese ex­po­sures in our so­cially re­spon­si­ble funds.”

While this does not spell dis­as­ter for mi­crolen­ders, it cer­tainly will push up the cost of fund­ing, es­pe­cially as bond in­vestors re­assess their risk pa­ram­e­ters.

“We have a dif­fer­ent fil­ter across our funds,” says Can­ter. “We don’t want to de­stroy the busi­nesses; we need com­peti­tors to the big banks. I speak for Futuregrowth and that’s not vet­ted by Old Mu­tual.”

In the mean­time, Capitec has ag­gres­sively sought to man­age the fall­out fol­low­ing what the mar­ket has in­ter­preted as a pub­lic de­nun­ci­a­tion of its busi­ness model.

“(Futuregrowth) do crit­i­cise the na­ture of this mar­ket seg­ment which we do not nec­es­sar­ily agree with,” the com­pany said. “Can­ter has con­firmed that their wider suite of fund­ing, for ex­am­ple bond and money mar­ket fund­ing, will still in­clude Capitec Bank’s is­sues.”

The group does not deny the mas­sive prob­lems t he i ndus­try is fac­ing and ac­cepts it will have a dif­fi­cult bal­anc­ing act to man­age its ex­po­sures es­pe­cially in a low- GDP en­vi­ron­ment. Jobs are scarce and ac­cord­ing to the Na­tional Credit Reg­u­la­tor, nearly half of SA’s 20m credit ac­tive con­sumers are be­hind on their pay­ments.

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