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FM Edition:

So here’s a delicious irony: finance minister Pravin Gordhan, who has locked horns repeatedly with the Guptas this year, will have the final say on whether the family’s business partner, Salim Essa, gets the green light to buy Habib Overseas Bank (HOB) for a rumoured R500m.

Speculation is rife that Essa and his business partner Hamza Farooqui are proxies for the family who, having been axed as clients by SA’s big four banks, are desperate for an alternative banking platform.

Kuben Naidoo, the banking registrar in the SA Reserve Bank, told the Financial Mail this week that his office has received the application to buy the bank, but he has yet to approve it.

"They have submitted a proposal. We have responded with questions and queries. They are yet to come back to us. So we have not yet begun to consider their request," he says.

However, the proposal is for the purchase of more than 50% of HOB’s shares from the UK-based Habib family — which means Gordhan has to OK the deal.

This could get tricky, given Essa’s links to the Guptas. The 38-year-old Essa, whose name pops up all over former public protector Thuli Madonsela’s state capture report, has a 21.5% stake in the family’s mining firm, Tegeta Exploration. Considering the banks think the Guptas are such a money-laundering risk, it’s no fait accompli that the deal will get the green light.

HOB, which has five branches and is headquartered in Jo’burg’s shopping mecca, the Oriental Plaza, has an impressive 25-year track record, which makes it older than Capitec Bank. Still, with only R1,2bn in deposits, it’s a minnow compared with its rivals.

When contacted, Essa refused to discuss the deal. When asked, Farooqui said talk of a R500m price tag is wrong — but he wouldn’t say what the price is.

Farooqui says: "There is a real opportunity in SA for a challenger bank to step in and provide access to finance for many of the young entrepreneurs and SMEs that are currently excluded and unable to grow."

But are they paying too much? If they were to pay R500m, for example, it would seem way above the bar. Last year, HOB’s financial statements revealed it made R22.7m in bottom-line profit. This would suggest they’re paying a price of more than 20 times earnings.

This is pricey, considering Barclays Africa’s shares are sold for only nine times its earnings and Standard Bank’s stock is trading at 10.8 times earnings. Sure, Essa and Farooqui would need to pay a premium to win control, but if they’re willing to get the bank at any cost, you’d have to ask if there are other motives.

Insiders say the buyers have big plans for HOB, turning it into a full-scale commercial bank, complete with home loans, vehicle finance and deposits.

Neither the bank’s staff nor its clients are happy.

"Staff are concerned, but so are clients — some of whom have been at the bank nearly 25-years," says one of the bank’s employees.

He adds that some clients are worried that the buyers are stalking horses for the Guptas: "Clients see what’s happening in the country with the president, they’re following things. So they want to find out who the new owners are: are they people you can trust?"

And, in the absence of communication, he says, some clients have already begun moving money.

HOB executive director Arshad Ansari clammed up when contacted by the Financial Mail. "We have no comment. We’re not authorised to speak regarding the transaction," he says.

Interestingly, HOB hasn’t had the most watertight of systems. In August, the Reserve Bank fined it R1m and ordered it to remedy "inadequate controls and working methods pertaining to the reporting of suspicious and unusual transactions". To be fair, a number of other banks were also hit, including Investec (which had to pay a R20m fine) and the SA Bank of Athens.

Gordhan, and Naidoo, will no doubt take a deep look into whether the owners are "fit and proper" before making a decision. And Essa’s links to the Guptas will no doubt give Gordhan pause.

As it is, there’s no love lost between the Guptas and Gordhan. In his court application in October, Gordhan laid bare R6.8bn in "suspicious transactions" involving the family and its associates. Gordhan has also warned Oakbay’s former CEO, Nazeem Howa, against the family’s repeated "attacks" on treasury, which he says are "not helpful or in the public interest".

So, if you’re wondering what incentive there is for President Jacob Zuma to perform a repeat of "Nenegate" during the festive season and axe Gordhan, it’s right here — in blinking red lights.