Old Mutual is preparing to launch a new retail bank in South Africa, marking a significant strategic shift nearly a decade after it divested its majority stake in Nedbank, one of the country’s largest financial institutions. The new entity, provisionally named OM Bank, is scheduled for a nationwide rollout in Q4 2025, following several delays related to regulatory and operational hurdles.
Due to regulatory considerations, the new bank will not carry the Old Mutual brand name, despite being fully backed by the group. It will operate within the Mass Market banking segment, positioning itself as a direct competitor to established players such as Capitec, African Bank, and Tyme Bank all of which currently compete with Old Mutual’s micro-lending business.
Between 2022 and 2024, Old Mutual invested approximately R2.8 billion to build the bank’s infrastructure and secure a deposit-taking retail banking license, which was officially granted in March 2024. This substantial investment reflects the group’s long-term commitment to expanding its footprint in South Africa’s retail banking sector.
Despite the scale of the investment, Old Mutual anticipates an initial loss run rate of R1.1 billion to R1.3 billion, with profitability expected to be achieved by 2028. The group views this as a strategic growth initiative that will enhance its overall value proposition and diversify its revenue streams.
The new bank will be led by Clarence Nethengwe, who previously headed Old Mutual’s Mass and Foundation Cluster, bringing deep experience in serving South Africa’s underserved financial segments. The bank’s governance structure is also taking shape, with Nomkhita Nqweni appointed as the inaugural chairperson of the board.
Old Mutual plans to leverage its existing customer base, trusted brand reputation, and extensive distribution network to accelerate adoption of the new bank. The bank’s digital-first approach will be anchored by a cloud-based platform, offering a single, scalable account that integrates debit, credit, overdraft, and savings functionalities all designed to be cost-effective and accessible.
According to Mark du Toit of OysterCatcher Investments, the launch of OM Bank presents a compelling opportunity for Old Mutual to unlock new value. Successfully transitioning the bank from a loss-making venture to a profitable operation could significantly enhance the group’s growth trajectory.
Old Mutual’s re-entry into banking comes after a long history with Nedbank, where it held a 53% controlling stake acquired in 1986. The group maintained majority ownership for nearly three decades before initiating a managed separation strategy in 2016, aimed at simplifying its corporate structure and allowing investors to assess the distinct merits of its various business units.
In September 2018, Old Mutual formally unbundled its majority stake in Nedbank, distributing R43.2 billion worth of shares to its shareholders roughly a third of its market capitalization at the time. This reduced its stake to 19.9%, held through Old Mutual Life Assurance Company South Africa Limited (OMLACSA).
Further divestments followed, including a 2021 announcement to unbundle an additional 12.2%, resulting in a shareholder distribution of R10 billion. Today, Old Mutual’s stake in Nedbank has dwindled to just 3.9%, according to Nedbank’s official disclosures.
Despite Nedbank’s current R115 billion market cap, which is nearly double Old Mutual’s R57 billion, both companies are considered undervalued relative to peers. Their price-to-earnings (P/E) ratios hover around 6, compared to Capitec’s P/E of 29, reflecting high growth expectations in the mass market banking space.
