The Gupta family have once again made headlines as one of their associates, Salim Essa in partnership with Hamza Farroqui, has shown interest in establishing a bank on South African shores under the Habib Overseas Bank banner. This comes after, the big four banks (Absa, Nedbank, FNB and Standard Bank) closed the Gupta family’s personal and business bank accounts and blacklisted them last year.
The battle between the big four banks and the Gupta’s continue, but they may be a shoe in as the Competition Commission approved the Essa and Habib merger without conditions earlier this week. According to reports, Essa and Farooqui paid the bank R450 million for the merger to take place.
The Gupta family is currently still under investigation by the Financial Intelligence Centre in connection with more than 70 banking transactions involving almost R7 billion. This has wreaked havoc for the Gupta-owned businesses as then CEO Nazeem Howa remarked that as a result 7500 jobs were in limbo, because doing business became considerably tougher.
The next step for the Essa and Farooqui bank will the Reserve Bank’s (SARB) approval. This will include a "fit and proper persons" test, as they will be owning 15% of the bank.
“The test would include examining its fiduciary oversight capacity, as well as the background of the acquiring entity in terms of governance, integrity and soundness,” reported Business Day.
SARB would also be responsible to conduct such a study on key executives and a select of nonexecutive directors of the bank. This has had many raising questions of the likelihood of the bank passing these prerequisites considering the known ties to the Gupta family.
The approval would further have to come from the office of Finance Minister Pravin Gordhan. He has in recent the past taken a strong position against corruption involving the Gupta family.
While the banking landscape will undoubtedly be affected, the question remains, as to how much. “The proposed transaction is unlikely to substantially prevent or lessen competition in any market. Further, there are no public interest concerns arising as a result of the proposed transaction,” the Commission told Fin24.
Insiders have reportedly stated that the application is before the Regulator currently, but this has not been confirmed.
ABSA, First National Bank and National Treasury failed to comment at the time of publication.
