Sanlam merger to test TymeBank's no predatory lending promise

Daily Maverick

13 hours ago

As the Competition Tribunal approval clears the way for TymeBank's acquisition of SanlamTyme JVCo and the SPL loan book, CEO Karl Westvig's commitment to fair lending faces its biggest test yet.
The last time TymeBank CEO Karl Westvig spoke to Daily Maverick, he made bold promises about the digital bank's approach to loan books.
'The mission has always been to be able to profitably bank an entry-level customer… And it's not through the cross sell. It's through core banking,' he insisted. This is banking philosophy 101 from someone who clearly reads the right textbooks, but the market has a way of testing such noble intentions.
TymeBank is paying R31.5-million for the 50% JVCo stake, plus approximately R400-million for half of Sanlam's loan book, plus another R320-million for a reference share entitling it to half of the credit life insurance profits from the JVCo loan book. That's a R750 million bet on an expanded lending business for a bank that has built its reputation on being different.
'These are some of the most abused people in the world,' Westvig acknowledged when previously discussing his predominantly low-income customer base. It's rare blunt honesty from a banking executive about the vulnerable position of South Africa's unbanked and underbanked population.
Walking in Capitec's shadow
Westvig was quick to draw a comparison with the titan of Techno Park that lords over SA's banking sector. 'Capitec fundamentally was a lending business… We've built our business as a transaction-led and savings-led bank.'
It was a fair point, but also slightly disingenuous. Capitec's lending-first approach has made it one of South Africa's most profitable banks, particularly among lower-income customers. TymeBank's transaction and savings model might sound more palatable, but profitability in banking, especially when serving entry-level customers, typically requires some form of credit extension.
Which brings us to the elephant in the room: this SanlamTyme acquisition is precisely about getting into lending in a bigger way. The question becomes whether TymeBank can maintain its 'fair and reasonable and competitive' lending promise while dealing with the realities of default rates and collection challenges that come with unsecured lending to financially vulnerable customers.
Playing the loan game
Here's the challenge: TymeBank is inheriting an existing loan book from Sanlam Personal Loans. The collection practices, interest rates, and terms of these existing loans were set by Sanlam, not TymeBank. How the digital bank handles this transition, particularly any customers who may be struggling with repayments, will be the first real test of Westvig's non-predatory commitment.
The broader South African lending market is notorious for aggressive collection practices, astronomical interest rates on unsecured loans, and terms that can trap borrowers in cycles of debt.
TymeBank's entry into this space, regardless of good intentions, puts it in direct competition with established players who have built profitable businesses on precisely the practices Westvig claims to oppose.
What this means for you
Expect TymeBank to launch more personal loan options soon, but without the exploitative hooks.
If you've been excluded from formal credit before, this deal could open the door.
For South Africans tired of tiered fees and opaque charges, TymeBank just got a lot more powerful.
The numbers will tell the story
The transaction's longstop date is 31 March 2026, with Sanlam planning to reinvest the proceeds into its broader growth strategy. That gives TymeBank roughly 18 months to prove that its approach can work at scale in the lending business.
The success of this venture will ultimately be measured not by Westvig's well-intentioned statements about financial inclusion and fair lending, but by TymeBank's loan loss provisions, default rates and, most importantly, customer complaints about collection practices in the quarters ahead.
If TymeBank can indeed provide competitive, fair lending to South Africa's underbanked population while maintaining profitability, it would represent a genuine breakthrough in financial inclusion. But the graveyard of financial services is littered with good intentions that couldn't survive market realities. DM