Habib Bank sale stirs Gupta fears

The SA Reserve Bank has recommended rejecting a Gupta-linked company’s bid to buy Habib Overseas Bank’s local unit, citing concerns about the source of the two businessmen’s income and tax declarations, sources say.

The Reserve Bank has written a letter to Finance Minister Pravin Gordhan recommending the merger between the Habib Overseas Bank unit and a South African company be blocked, said the officials who spoke on condition of anonymity. One of the businessmen is linked to the Gupta family, whom President Jacob Zuma describes as friends.

Salim Essa, a director of VR Laser Services, partly owned by the Gupta family’s Oakbay Investments, and Hamza Farooqui had bid to buy all of Habib Overseas Bank’s South African assets.

Habib Overseas, owned by Luxembourg-based Pitcairns Finance, has about R1.1 billion in South African assets, a source said.

The deal would have merged Habib’s SA arm and Vardospan, a joint venture between Cinq Holdings and Pearl Capital, owned respectively by Essa and Farooqui. Sarb refused to comment. Essa expressed confidence the deal would be approved “allowing us to fulfill our vision of a 100% black-owned bank”.

South Africa’s biggest lenders closed the accounts of Gupta-owned companies last year. The Guptas have alleged the lenders colluded when they decided to close their accounts. The banks deny the accusation. –