“Credit to Edcon customers would be granted subject to African Bank’s credit criteria,” the Johannesburg-based bank said in a statement today. The preliminary agreement is part of a “long-term strategic relationship,” it said.
African Bank, which owns unprofitable furniture business Ellerine, said in January it was in talks with a retailer to widen its distribution network. The deal would provide South Africa’s largest clothing retailer with an alternative credit provider to Barclays Plc’s Absa Bank unit, which bought Edcon’s private-label store cards business in 2012.
“This suits Edcon by not being dependent on Absa,” Mark Hodgson, a Cape Town-based analyst at Avior Research Ltd., said in a phone interview. “For African Bank, it helps them go more upmarket in the customers it could attract.”
African Bank shares rose 1 percent to 12.45 rand by the close in Johannesburg, bringing this year’s gain to 3.3 percent. The stock slumped 50 percent last year.
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