CABS, the country’s largest building society, has set its sights on commercial banking, setting the stage for a bruising battle with the established players in the banking sector, businessdigest can reveal. The move, which analysts see as positive and timely, will see the county’s prime mortgage lender enter the fray previously dominated by local banking giants, CBZ and the international banks — Standard Chartered, Barclays and Stanbic Bank
Sources told businessdigest this week that although the developments at Cabs remained a closely guarded secret, the building society was making its foray into commercial banking as a matter of strategic long-term survival.
However, Cabs MD Kevin Terry kept his cards close to his chest.
“Cabs is currently the country’s largest building society and as such we are always looking for ways to increase our product offering to the market.
Whilst we have not put in an application for a commercial banking licence, we have of late launched new products like Textacash, Cashpassport and Cabs Bancassurance, which are a clear indication of our intention to offer a more comprehensive financial solution to our clients. Our goal is to offer a wide range of financial products to cater for the different clientele we have on our books,” he said.
Recent developments at Cabs support analysts’ views that Cabs is positioning itself to compete across the full spectrum of banking services.
“Cabs is a solid lender, with a very strong reputation in the country. They are well-placed to compete against the established commercial banks.
They have the deposit base, effective systems and an appropriate distribution network to become a formidable player,” a source said.
He said Cabs applied for and was granted exchange control approvals by the Reserve Bank to offer trade finance and other international banking products. The financial institution had been actively recruiting qualified personnel from established players, clearly signalling their intentions to compete in this sector, he added.
“Cabs has in fact been one of the country’s largest banks, masquerading as a building society. The disguise suits and has served them well and the latest moves speak into that well-understood strategy,” a banking analyst said.
The move by Cabs is seen as strategically placing the institution to take advantage of developments likely to unfold in the banking sector if the international banks are forced to cede 51% shareholding under the country’s controversial indigenisation law. There is likely to be massive depositor and customer flight from the targeted banks, making Cabs ideally-placed to snap up those customers.
“We’re a solid banking organisation with nearly 60 years of business experience. We have a proud heritage of banking innovation. We’re backed by Old Mutual Plc and we’ve been awarded an A+ Global Credit Rating. We are part of our community and our country. We’re driven by passion, strength and vision,” Cabs website says.
In 2011, Cabs, in partnership with parent company Old Mutual Zimbabwe, launched a number of initiatives such as the Youth Fund Loan Scheme, the SME loan package, and the Distressed and Marginalised Areas Fund (Dimaf).
The society also launched the Budiriro Housing Scheme in conjunction with the City of Harare.