Rand Merchant Bank (RMB), which represents the corporate and investment banking (CIB) activities of SA’s most valuable banking group, FirstRand, is winding down its regulatory debt sponsor business.
Several clients, including Discovery, African Bank and Pepkor, have already secured new debt sponsors.
Discovery this week advised clients that it had appointed Nedbank’s CIB unit as its equity and debt sponsor with effect from February.
“RMB resigned as debt sponsor to Discovery pursuant to its decision to wind down its regulatory debt sponsor business. Consequently, Discovery has decided to appoint a single provider for both debt and equity sponsor services,” it said. “The company wishes to thank RMB for its services over the years.”
Other groups that have had to find new debt sponsors after RMB’s decision include Santam, Brait, AECI, Momentum Metropolitan, Accelerate and Life Healthcare.
Questco, a boutique corporate advisory firm, Nedbank, Standard Bank and Investec has snapped up most of RMB’s erstwhile clients.
RMB said it remains committed to providing services to its clients after the decision to “reposition” the debt sponsor unit.
“Last year, RMB decided to reposition its debt sponsor services to focus solely on FirstRand Group-related activity. Since July 2024, RMB engaged extensively with its clients to ensure a managed transition and ensure continuity of all our clients’ needs.
“We remain deeply committed to partnering our clients on their broader corporate and investment banking needs,” the company said.
“RMB remains committed to servicing its clients, and the decision to reposition the debt sponsor business was made within the broader RMB long-term strategy. This move aligns with our growth plans by allowing us to focus on areas that offer greater strategic value and long-term benefits for all our stakeholders.”
RMB is one of the star performers in FirstRand’s armoury, reporting 7% increase to R9.7bn normalised earnings in the 2024 financial year, while net interest income grew 8%, supported by 11% growth in core lending advances and 5% growth in deposits.
RMB’s strategy is to build an integrated, diversified, scalable business to meet its clients’ needs. To this end, it has recently made moves to make the business leaner and meaner.
After a review of RMB’s strategy in India, the company decided to close the India branch and instead establish a representative office.
RMB has recently established an advisory business in India (RMB Capital India) which is focused on capital raising and mergers & acquisitions and has a licence from the securities and exchange board of India.
To build scale in its CIB business, FirstRand a few months ago announced a deal that will see the current international wholesale banking clients of British multinational lender HSBC transferred to RMB.
The transfer will also include the incorporation of HSBC’s SA employees into RMB. This is as RMB fine tunes its strategy to further scale its corporate client franchise, by “bringing high-quality assets and liabilities with the opportunity to service a valuable client base of domestic corporates and multinationals operating in SA and across the continent”.
Transactions in SA’s CIB sector are expected to ramp up this year with the expected outlay on infrastructure projects, including rail and water.
Investment into SA’s crumbling rail infrastructure is expected to ramp in the year ahead, after the move by transport minister Barbara Creecy in December to approve the publishing of Transnet's network statement, a major step in facilitating open access to the country’s rail network by third-party operators — a move welcomed by the business community and industry players.
The network statement shows that Transnet needs about R14bn a year of investment in its six corridors, which have been plagued by theft, vandalism and outdated systems.
Ratings agency S&P this month said it expects private sector credit to flourish in 2025 with the mooted multibillion-rand outlay in rail, water, ports and energy expected to increase lending opportunities for the country’s top banks.
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