JOHANNESBURG, April 25 African Bank Investments
has entered a non-binding agreement with Edcon to be a
secondary credit provider for the South African retailer's
customers, the two companies said on Friday.
The bank, which also sells furniture on credit, has suffered
from a rise in bad loans as debt-laden South Africans struggle
to meet their obligations against a backdrop of stubborn
unemployment and rising inflation.
Absa, the South African unit of Barclays Africa Group
, became the primary credit provider for Edcon customers
when it bought the private label store's card portfolio for 10
billion rand ($940 million) in 2012.
"As a secondary credit provider, African Bank would provide
credit to Edcon customers who do not fit within the Absa Bank
credit criteria," Edcon said in a statement.
Abil said signing the term sheet with Edcon formed the basis
for negotiations and customers would be granted credit subject
to its lending criteria.
Despite relatively easy access to credit, many South
Africans have scaled back consumption, hit by higher fuel and
electricity prices and rising interest rates in Africa's most
Retail sales growth in February came in at 2.2 percent
year-on-year in February, much lower than the 3.5 percent
analysts had expected.
($1 = 10.6327 South African Rand)
(Reporting by Helen Nyambura-Mwaura; Editing by Ed Stoddard)