Company profile

History of the Group

 
Since then, the founders, together with a long standing and stable management team, have created the second largest financial institution in South Africa. The founders still retain a significant equity stake in FirstRand and Laurie Dippenaar is the Group’s non-executive Chairman.

FirstRand was created in its current form in February 1998, through the disposal of Anglo American’s interests in First National Bank and Southern Life and the merger of these assets with RMB and Momentum. At the time this was the largest transaction in the history of local financial services.

Since 1998, the Group has grown through a combination of corporate action and organic growth. Examples of corporate action include:

• In March 2002, FirstRand Bank acquired the mortgages book of NBS for R11.9 billon. At the time, NBS was a distressed bank which needed to reduce its asset base. The book was integrated with FNB’s existing residential mortgages book and significantly increased the Bank’s share of the South African residential mortgage market.
• In June 2002, FNB Namibia merged with Swabou Holdings to become the largest bank in Namibia and a major player in the bancassurance market.
• In September 2002, FirstRand Bank acquired the housing book of Saambou Bank which at that time was under curatorship. The transaction was valued at R1.4 billion and significantly enhanced FNB’s position in the low and medium income housing market.
• In October 2002, WesBank acquired the motor vehicle financing book of Barloworld Limited for R830 million.
• In June 2007, FirstRand acquired a majority shareholding in Banco Desenvolvimento e Comercio in Mozambique for R139 million. The business has been fully integrated into FNB.

Greenfields

In addition to the corporate action described above the strategy of the Group, where appropriate, has been starting and growing completely new businesses, which the Group refers to as its “greenfields” approach. Examples of significant “greenfields” start-ups by the Group include:

• In 1998, the Group started OUTsurance, which is today the leading direct short-term insurance business in South Africa, contributing earnings of R654 million for the year to June 2009.
• In 1995, FirstRand founded Discovery Health which was subsequently separately listed in 1995 and only recently fully unbundled from the Group. Discovery is South Africa’s leading health insurance company and produced R1.7 billion of profits in the year to June 2009.
  

More recently, examples of this “greenfields” strategy have formed part of the Group’s expansion into Africa and include the establishment of:

• The FNB Lesotho subsidiary in October 2004, focusing on the business and retail markets..
• The FNB Zambia subsidiary in March 2009, offering full banking services across the retail and business markets
• The FirstRand India branch May 2009, focusing on corporate and investment banking to support the Group’s India/Africa corridor strategy particularly with regard to capturing the significant trade and investment flows that exist.

 

Momentum unbundling

In December 2010, FirstRand unbundled its holding in Momentum, the Group’s the 100% owned insurance division, following Momentum’s merger with Metropolitan. The Group carefully evaluated the consequences of retaining ownership of the new merged entity within FirstRand, however, reached the conclusion that shareholders benefited most from a complete unbundling. Not only would it unlock any potential value trapped within FirstRand but would also ensure that the new entity has sufficient free float on the JSE and the necessary financial and regulatory flexibility to realise its strategic objectives.

 

FirstRand Black Economic Empowerment (BEE) transaction

In February 2005 the Group sold an effective 10% interest in FirstRand to four broad-based empowerment groups, Kagiso Trust, Mineworkers Investment Company (“MIC”), WDB trust and the FirstRand Empowerment Foundation (a newly created FirstRand BEE entity, with a mandate for broad-based transformation), and black South African FirstRand staff and non executives.

The Group selected its BEE partners because they share FirstRand’s objectives of enhancing broad-based BEE by addressing the needs of a wide constituency. In addition, the BEE partners have excellent reputations, successful track records and long standing relations with FirstRand and with each other.