The big four SA commercial banks 'inadvertently rescued` wallowing Internet bank 20Twenty, by investigating and dragging out negotiations with the curator of defunct Saambou before Standard Chartered eventually bought it.
20Twenty head Cristo Davel says: "We were investigated by all of the major SA commercial banks and each needed about three months to conduct their investigations including a due diligence. Every time we entered negotiations, they extended the life of 20Twenty."
After spending 18-months of its barely two years in existence in curatorship, 20Twenty was bought by Standard Chartered last month for about $10 million, roughly equating to what the Internet bank`s previous parent Saambou initially invested in it.
The big four SA commercial banks are First National Bank, Standard Bank (originally part of Standard Chartered), Nedcor and Absa.
According to Davel, all four banks took a close look at 20Twenty and its operations before withdrawing their interests for a variety of reasons. Davel refused to disclose which bank gave what reason.
"The reasons ranged from 'a duplication of existing operations` to 'incompatibility of systems`. However, the most laughable was 'this wont make money`," he says.
Now the big four have to face the real threat of one of the world`s largest and most powerful banks making a real and dramatic entry into a market that had little choice, by using a brand that has demonstrated strong customer loyalty.
"Our customers were also extremely loyal and supported us all the way. We had no churn out of our 40 000 established customers and they even set up a fan website," Davel says.
Davel, who now carries the title of "head of retail banking for Standard Chartered SA," says this is the first time that the British bank has retained the name of a new acquisition.
"They were extremely thorough in their investigation. They sent 13 people who spend about three months investigation every aspect of our business. And that was done after a year of having examined the SA retail banking market," he says.
20Twenty will begin to accept new customers in the first quarter of 2004, once Standard Chartered`s SA banking license has been completed with the SA Reserve Bank.
"We will also be offering new products to meet our client`s needs and there is also the very real possibility that Standard Chartered may export the 20Twenty brand to other markets," Davel says.
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