Bank of Namibia has refused to pronounce itself on the prospective takeover of EBank by FNB Namibia, saying it will do so at the right time.In an emailed response to questions from The Patriot, the bank’s Director for Strategic Communications and Financial Sector Development, Emma Haiyambo, said: “Kindly note that this is a pending application and as such the bank is not in a position to comment on it now but will do so at the right time.”
FNB Namibia recently announced that it has concluded negotiations to acquire 100% of Pointbreak and EBank, subject to all necessary regulatory approvals. The transaction is, however, still subject to various regulatory approvals, including those from the Bank of Namibia, Namfisa, Namibian Competition Commission and the South African Reserve Bank and can only be implemented after these approvals have been received.Pointbreak, a Namibian financial services group, provides investment management and wealth management services to the private, corporate and institutional markets, managing in excess of N$8 billion of third party capital. EBank delivers inclusive banking to its clients, many of whom are in rural areas with little access to banking services.
Namibian Competition Commission (NaCC) has indicated that it is investigating the proposed transaction to determine the effect the deal might have on factors such as employment, market dominance and as well as on the consumers. When approached about the matter, the NaCC could not be drawn to comment, saying it would be premature for it, at this stage, to determine the effect of the transaction on competition within the banking sector.The competition commission said its investigation would aim to determine whether the transaction would result in the substantial reduction or prevention of competition; whether the transaction would result in the creation of dominance/increase in unilateral market power as well as the impact of the merger on public interests, including consumer and employee welfare. The probe would also consider the nature of the transaction, any signs of market concentration as well as potential loss of a competitor.
The Commission encouraged companies to offer consumers goods and services at the most favourable terms. It encouraged efficiency and innovation and reduced prices. To be effective, competition requires companies to act independently of each other, but subject to the competitive pressure exerted by the others, NaCC said. “In a competitive market environment, market participants are mutually constrained in their pricing, output and related commercial decisions to some extent by the activities of other market participants (or potential market participants). In other words, the greater the degree of competition in a market, the less market power each market participant will possess.”The Commission is well aware that mergers can alter the level of competition in a market, saying: “Where there are sufficient products or services that customers can switch to or substitute with those offered by merging parties to effectively constrain the merged undertaking, the merger is unlikely to affect the level of competition.”
Generally, NaCC said, most mergers do not raise competition concerns but cautioned that others may lessen competition by reducing or weakening the competitive constraints or reducing the incentives for competitive rivalry. “These mergers may be detrimental to consumers because they may lead to an increase in price, reduced output or deterioration in some other aspect of the service offering.”Asked if it is worried that the planned takeover might pushout FNB’s competitors and eventually result in a monopolised banking sector, NaCC responded: “This determination can only be made after the transaction has been assessed. The Commission does not want to speculate at this point in time.”
Meanwhile, while the planned takeover is still moving through the clearance phases, EBank yesterday announced that its CEO, Michael Mukete has resigned, effective 28 February 2017.“Mr Mukete will remain on the Board of EBank,” said the company in the statement announcing his departure.