Old Mutual Bank has become South Africa's first bancassurance institution, able to offer Old Mutual and Nedcor clients a package of financial services that cover their insurance, assurance and banking needs.
Old Mutual Bank is a joint venture between Old Mutual, the country's largest life assurance company, and Nedcor, the largest bank in South Africa.
Pete Southworth, the chief executive of Old Mutual Bank, says Old Mutual obtained a banking licence in 1999 and launched Old Mutual Banking Services, an online and intermediary-based bank.
Following the collapse of the small banking sector last year, and Nedcor's takeover of BoE Bank, Old Mutual handed back its banking licence and decided that it made more sense to run a bank as a division of Nedbank Limited. Old Mutual is a major shareholder in Nedbank.
This year, Old Mutual Bank took over the 300 000 clients of Permanent Bank (one of the three banks in the Nedbank Limited group).
By Friday last week, all 46 Permanent Bank branches had been renamed Old Mutual Bank.
In terms of the new 50/50 joint venture, Nedbank supplies the banking licence, banking products, systems and processes, while Old Mutual looks after sales and marketing, and manages the channels through which Old Mutual Bank's products and services are made available, such as branches, ATMs, self-service terminals and the internet.
The products previously offered by Permanent Bank, including cheque, savings and credit card accounts, investment accounts and home loans, will all continue to be offered, but under the Old Mutual Bank brand.
Old Mutual Personal Financial Advice's 2 500 agents and 3 000 independent brokers will promote Old Mutual Bank's products and services among their clients. Old Mutual Personal Finance focuses on the middle-income market - households that earn between R100 000 and R500 000 a year.
The bancassurance venture gives Nedbank access to Old Mutual's three million policyholders who may need banking products. In return, Old Mutual gets access to Nedcor's payment infrastructure, banking products and processes as well as Permanent Bank's 300 000 clients.
Southworth says over the next year, Old Mutual Bank's branches will be turned into centres that provide clients with financial advice. By the end of the year, Old Mutual Bank will augment the range of products that were offered by Permanent Bank with packaged insurance, assurance and investment products.
Southworth says Old Mutual Bank will offer competitively priced products and interest rates, as well as special deals such as its current offer of a 12.65 percent effective rate of interest on fixed deposits of R5 000 or more.
Tom Boardman, the head of retail banking at Nedcor, says the next stage in the rationalisation of the Nedcor brands will be the absorption of Cape of Good Hope Bank into Nedbank.
The absorption of NBS Bank and Pepbank into Nedbank and Peoples Bank has been delayed until 2004.