FORMATION OF A JOINT VENTURE BETWEEN AFRICAN BANK AND SBSA

STANDARD BANK INVESTMENT CORPORATION
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1969/017128/06)
("STANBIC")
AFRICAN BANK INVESTMENTS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 1944/021193/06)
("ABIL")

FORMATION OF A JOINT VENTURE BETWEEN AFRICAN BANK LIMITED ("AFRICAN BANK") AND
THE STANDARD BANK OF SOUTH AFRICA LIMITED ("SBSA") TO SERVICE THE MASS MARKET
INTRODUCTION

FURTHER TO THE CAUTIONARY ANNOUNCEMENT ISSUED BY ABIL ON 24 MARCH 2000, STANBIC
AND ABIL ANNOUNCE THAT SBSA AND AFRICAN BANK HAVE FORMED A PARTNERSHIP TO
SERVICE MASS MARKET CUSTOMERS. THIS REPRESENTS THE ALIGNMENT OF TWO OF THE
LEADING PLAYERS IN THE PROVISION OF BANKING SERVICES AND THE EXTENSION OF
CREDIT IN THE MASS MARKET SEGMENT.

SBSA AND AFRICAN BANK WILL COMBINE THEIR RESPECTIVE AREAS OF SKILLS AND
EXPERTISE TO:

- OFFER TO THEIR RESPECTIVE CUSTOMERS NEW PRODUCTS AND SERVICES; AND

- ATTRACT NEW CUSTOMERS WHO ARE NOT TRADITIONALLY CUSTOMERS OF EITHER SBSA OR
AFRICAN BANK.

INITIALLY THE FOCUS WILL BE ON LOAN, INSURANCE AND TRANSACTION PRODUCTS TO THE
MASS MARKETS.
BACKGROUND AND RATIONALE FOR THE PARTNERSHIP

STANBIC, THROUGH ITS WHOLLY-OWNED SUBSIDIARY, SBSA, IS A SIGNIFICANT PROVIDER
OF TRANSACTIONAL BANKING SERVICES AND SAVINGS ACCOUNTS TO THE MASS MARKET. SBSA
HAS AN ESTIMATED MARKET SHARE OF 37% OF TRANSMISSION ACCOUNTS IN THE MASS
MARKET, WHICH IS ONE OF SOUTH AFRICA'S FASTEST GROWING DEMOGRAPHIC SEGMENTS.
SBSA'S AUTOBANK E CHANNEL OFFERS A VALUE-ADDED RANGE OF FINANCIAL SERVICES TO
THE MASS MARKET BY PROVIDING A SIMPLE PRODUCT SET THROUGH EFFICIENT ELECTRONIC
DELIVERY SYSTEMS, SUPPORTED BY ONGOING CUSTOMER EDUCATION. MORE THAN 2,5
MILLION CUSTOMERS OBTAIN ACCESS TO THE FORMAL BANKING SYSTEM THROUGH SBSA'S
EPLAN, A TRANSACTIONAL FACILITY WITH A LINKED SAVINGS OPTION AND WIDE ATM
FUNCTIONALITY. OTHER PRODUCTS ALREADY OFFERED TO THE MASS MARKET BY SBSA
INCLUDE FUNERAL PLANS, SOCIETY SAVING SCHEMES AND HOUSING LOANS.

SBSA HAS EXPERTISE IN THE PROVISION OF TRADITIONAL BANKING AND ASSOCIATED
FACILITIES TO THE MASS MARKET, BUT DOES NOT HAVE THE CREDIT MANAGEMENT
EXPERIENCE OF AFRICAN BANK IN PROVIDING PERSONAL, UNSECURED LENDING PRODUCTS TO
THE MASS MARKET.

AFRICAN BANK PIONEERED THE SYSTEMATIC DEVELOPMENT OF CREDIT PROVISION TO THE
MASS MARKET AND HAS A 42% MARKET SHARE OF ADVANCES. AFRICAN BANK PROVIDES
UNSECURED LENDING TO OVER 1,4 MILLION ACTIVE ACCOUNTS WITH A LOAN BOOK OF OVER
R4,5 BILLION. AFRICAN BANK'S ONGOING SUCCESS IS BASED ON A STRATEGY OF
PENETRATING UNDER-SERVICED CREDIT MARKETS AND ESTABLISHING INNOVATIVE

COLLECTION METHODS. AFRICAN BANK HAS A LONG-TERM COMMITMENT TO THE INDUSTRY AND
IS EAGER TO FACILITATE THE FURTHER DEVELOPMENT AND EXPANSION OF THE MASS MARKET
FINANCIAL SERVICES INDUSTRY.

AFRICAN BANK HAS EXPERTISE IN THE PROVISION AND CREDIT MANAGEMENT OF PERSONAL
UNSECURED LOANS AND ASSOCIATED PRODUCTS TO THE MASS MARKET, BUT DOES NOT
PROVIDE OTHER TRADITIONAL BANKING FACILITIES TO ITS CUSTOMER BASE.

ACCORDINGLY, THE PARTIES HAVE DECIDED TO COMBINE THEIR RESPECTIVE CORE
COMPETENCIES IN THE FORM OF THIS PARTNERSHIP.
KEY FEATURES OF THE JOINT VENTURE

SBSA AND AFRICAN BANK WILL FUND THE JOINT VENTURE, WHICH WILL TAKE THE FORM OF
A PARTNERSHIP AND WILL HAVE AN INITIAL FUNDING FACILITY OF R500 MILLION. THE
LOAN BOOK OF THE JOINT VENTURE IS EXPECTED TO GROW TO BETWEEN R3 BILLION AND R5
BILLION OVER A FIVE-YEAR PERIOD. PRICING OF INTEREST ON THE LOANS WILL BE BOTH
APPROPRIATE TO THE RISK PROFILE OF BORROWERS IN THIS MARKET AND ATTRACTIVE TO
BORROWERS. SBSA AND AFRICAN BANK WILL SHARE IN THE PROFITS ARISING FROM THE
PARTNERSHIP IN THE RATIO 60:40, RESPECTIVELY.

SBSA WILL PROMOTE AND ORIGINATE AFRICAN BANK LOAN PRODUCTS IN ITS AUTOBANK E
CENTRES AND BRANCH NETWORK. AFRICAN BANK WILL BE PRIMARILY RESPONSIBLE FOR
CREDIT APPROVAL, COLLECTIONS AND ARREARS MANAGEMENT.

AFRICAN BANK WILL PROMOTE AND OPEN EPLAN ACCOUNTS IN ITS BRANCHES.

ALL LOANS PROVIDED WILL BE TERM LOANS AND WILL BE SUBJECT TO ESTABLISHED
AFRICAN BANK CREDIT APPROVAL PROCESSES, WHICH ARE BASED ON AFFORDABILITY.
EMPHASIS WILL BE PLACED ON CONSUMER EDUCATION. THERE WILL BE THE PROVISION OF
ASSOCIATED INSURANCE PRODUCTS AND SERVICES SUCH AS DEATH AND DISABILITY
INSURANCE, AS WELL AS RETRENCHMENT COVER.

JOINT MANAGEMENT AND STEERING COMMITTEES WILL BE ESTABLISHED TO OPERATE THE
PARTNERSHIP.
BENEFITS ACCRUING TO THE PARTNERS AND CUSTOMERS

THE PARTNERSHIP IS ANTICIPATED TO PROVIDE OVER 600 000 NEW EPLAN ACCOUNTS FROM
THE AFRICAN BANK CLIENT BASE. THIS WILL PROVIDE A FOUNDATION FOR THE PROVISION
OF OTHER SERVICES TO THE MASS MARKET.

SBSA WILL BE ABLE TO EXPAND ITS EPLAN SERVICES TO THE AFRICAN BANK CUSTOMER
BASE AT LOW INCREMENTAL COST. THIS IS EXPECTED TO LEAD TO A SUBSTANTIAL
INCREASE BOTH IN THE NUMBER OF EPLAN CUSTOMERS AND THE AVERAGE REVENUE
GENERATED PER ACCOUNT, RESULTING IN A REDUCTION IN THE COST:INCOME RATIO OF
SERVICING THE MASS MARKET. BOTH PARTIES EXPECT TO GROW THEIR ASSET BASES
SUBSTANTIALLY BY PROVIDING NEW LOANS TO MARKETS WHICH HAVE PREVIOUSLY BEEN
UNDER-SERVICED.

AFRICAN BANK WILL BE ABLE TO EXPAND ITS SERVICES AGGRESSIVELY FROM

PAYROLL-BASED LENDING INTO THE BROADER RETAIL BANKING MARKET.

THE JOINT VENTURE WILL PROVIDE COST EFFECTIVE DELIVERY OF A BROADER RANGE OF
FINANCIAL SERVICES TO THOSE SECTORS OF THE SOUTH AFRICAN POPULATION THAT HAVE
BEEN RESTRICTED OR DENIED ACCESS TO THE FORMAL RETAIL BANKING SYSTEM.
CONDITIONS PRECEDENT

THE IMPLEMENTATION OF THE PARTNERSHIP IS SUBJECT TO THE APPROVAL OF THE
REGISTRAR OF BANKS AND THE NECESSARY REGISTRATIONS WITH THE MICRO FINANCE
REGULATORY COUNCIL.
FINANCIAL EFFECTS

THERE WILL BE NO IMMEDIATE IMPACT ON EARNINGS OR NET ASSET VALUE FOR EITHER
PARTY, BUT BOTH PARTNERS EXPECT SUBSTANTIAL BENEFITS TO ACCRUE TO THEIR
RESPECTIVE SHAREHOLDERS OVER TIME.
JOHANNESBURG
5 APRIL 2000
SPONSORING BROKER TO STANBIC AND ABIL
DEUTSCHE BANK SECURITIES (PTY) LTD
(REGISTRATION NUMBER 1973/006709/07)
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
CORPORATE ADVISERS TO STANBIC
SCMB
STANDARD CORPORATE AND MERCHANT BANK

(A DIVISION OF THE STANDARD BANK OF SOUTH AFRICA LIMITED
(REGISTRATION NUMBER 1962/000738/06)
JOINT SPONSORING BROKER TO STANBIC
STANDARD EQUITIES (PROPRIETARY) LIMITED
(REGISTRATION NUMBER 1972/008305/07)
(MEMBER OF THE JOHANNESBURG STOCK EXCHANGE)
JOINT SPONSORING BROKER TO ABIL
ABN-AMRO SECURITIES (SOUTH AFRICA) (PTY) LTD.
REGISTRATION NUMBER 1995/001231/07
MEMBER OF THE JOHANNESBURG STOCK EXCHANGE
LEGAL ADVISERS TO STANBIC
BOWMAN GILFILLAN INC.
REG. NO. 98/21409/21
LEGAL ADVISERS TO ABIL
MOSS-MORRIS INC.