News that Absa is to acquire Edcon’s credit book for R10 billion was announced last week.
The transaction was described as a perfect match, as it would allow Edcon to concentrate on growing its retail operations, while providing Absa access to the retailer’s 3.9 million customers (www.businessday.co.za).
Absa Head of Retail Markets Arrie Rautenbach described the move as a long-term strategic relationship.
“Essentially, the transaction will enable Absa to provide Edcon customers with the benefits to a wide range of financial products and services,” he said.
The deal will be finalised in the second half of this year. Rautenbach said Absa would be responsible for the provision of credit, collections, management of fraud, risk, finance, legal and compliance operations of the store card business. Edcon, on the other hand, will retain all customer interface activities, including sales and marketing, customer services and collection operations.
“It is business as usual for Edcon customers. Edcon customers will remain Edcon customers. Absa will have a relationship with Edcon customers as cardholders in relation to the credit aspects of their store cards. This should ensure a simple and seamless customer experience,” Rautenbach said.
Managing Director of debt collections company Accountabilty, Wendy Kemp, agreed with Rautenbach that Edcon card holders need not be concerned.
“Absa has invested heavily into this project and it is my opinion that this could create opportunities for Edcon’s customers who could possibly be offered unsecured (no collateral required) loans of anything between R500 to R300 000, depending on the consumer's risk profile,” Kemp said.
She added that currently Edcon had an incredibly efficient credit facility where they conducted pre-credit checks on all new applicants.
The transaction is not a first for Absa, who acquired Woolworths Financial Services for R875m.