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Competition - It could get wild out there

28 February 2006 Angelo Coppola

Financial services competition from international players, or the so-called big gorillas, may be here (in South Africa) in two to three years.

The prospects, according to Paul Harris the head of the Firstrand group - for increased international competition, or the big gorillas entering the local market, really depend on how long the country and its businesses can continue growing.

Dominance around distribution is the one key differentiator between the local players and any international operators, thinking of entering the space. We are ready for them, says Harris.

On the other hand the Barclays Absa deal and the recently concluded Old Mutual Skandia transactions have put the local financial services companies into the spotlight.

The strong drivers of profit growth and performance are coming from SA financial services companies, and the international analysts are starting to look at the local companies, as they fish around for new opportunities.

Harris says that there may be a new wave of corporate action, with the larger players still the candidates like City group, for example, and according to Harris this could happen in the next two to three years, dependent on the how long the country can maintain economic growth.

Harris says that the local companies are on the radar screens, and the sustainability of the growth will determine whether they stay there.

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