African Bank in Talks to Offer Loans to Edcon’s Customers

African Bank Investments Ltd., South Africa’s largest provider of unsecured loans, said it’s in talks with Edcon Ltd. to offer loans to the retailer’s clients.

“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.