Portugal considers Mercantile short list

Mercantile Bank may soon be in South African hands, as the Portuguese government — the owner of Mercantile’s parent, Caixa Geral de Depósitos — considers a short list of four preferred bidders.

“The sale is going full steam ahead,” Mercantile CEO Karl Kumbier told Business Day on Thursday, but he would not comment on the bidders.

Given the Reserve Bank’s preference for a “shareholder of reference”, the buyer is likely to have deep pockets. However, other banks may be precluded due to competition issues.

Caixa, which has been Mercantile’s sole shareholder since it delisted in 2012, is Portugal’s largest bank by assets.

The sale of Mercantile and other banking assets globally was a European Central Bankimposed condition of a restructured loan.

The Portuguese council of ministers would consider 18 nonbinding offers, Kumbier said. “Four bidders have been supported by our board and the board of Caixa,” said the CEO.

“In two weeks’ time, the government will approve a shortlist and those short-listed bidders will then be allowed to do a due diligence on Mercantile and have access to management.

“We are hoping for a new shareholder by the end of the year,” Kumbier said.

The sale comes as SA’s banking sector is undergoing considerable change, welcoming new entrants, including Discovery Bank and TymeDigital, for the first time in more than a decade. It also presents the possibility of a black-owned bank entering the market.

Kumbier said he was “very happy with the list”. Price and conditions would be the most important factors in deciding who the “winner” was, he said.

Mercantile will probably go for between R2.5bn and R5bn, considering that its net asset value is projected to reach R2.5bn at the end of 2018 and banks generally sell for between one and two times their book value.

Mercantile’s R12.8bn balance sheet makes it comparable in size to Sasfin, both serving small to medium-sized enterprises and entrepreneurs.