The Portuguese Council of Ministers has announced its approval of the sale by Caixa Geral de Depósitos (CGD) of its entire stake in Mercantile Bank to Capitec Bank Limited.

CGD, which owns 100% of Mercantile, is selling the bank as part of a strategic recapitalisation plan approved by the European Commission and requiring CGD to reduce its foreign assets.

CGD was one of three Portuguese banks granted aid by the European Central Bank and European Commission in the aftermath of the global financial crisis of 2008.

Capitec, traditionally a retail bank, bid to purchase Mercantile Bank in a move to formally enter the business banking space.

Karl Kumbier, CEO of Mercantile Bank, says he is very excited that Capitec has chosen Mercantile as its partner to build the best business bank in the country – a very achievable goal since Capitec was recently ranked the top bank in South Africa and one of the top three in the world, according to the latest Lafferty global rankings.

“Capitec is a brand that is associated with hard work, innovation, and disruption. It is the fastest growing bank in the country and has over 10 million clients.”

While the sale agreement remains to be signed by all parties involved and is subject to approval by the relevant South African regulatory bodies, Kumbier says the bank is looking forward to the next phase of its growth journey.

“As an organisation, we are grateful for the guidance and support we have received from CGD over a long and successful relationship. However, we are very excited about the potential new opportunities we can unlock under the ownership of Capitec, a bank that has been bold in its strategy and focused in its execution.”

Kumbier added that Mercantile’s experience and expertise in serving small and medium-sized businesses will bring value in targeting this generally under-served market.

“We believe that combining Capitec’s brand, its ability to scale, and its experience in disrupting the consumer banking market with Mercantile’s experience and skill in business banking will allow us to build a world-class business banking offering that will evolve to consistently address the unique needs of all South African entrepreneurs.”

Read: Capitec share price soars on business banking plans