Bazookas and bankers

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The cost of armoured car attacks.

JOHANNESBURG - Shareholders and clients are bearing the cost of violent crime against ATMs and armoured cars. Standard Bank (JSE:SBK) and Capitec (JSE:CPI) speak out on the issue and dispel a commonly held belief that South Africa is the worst country for this kind crime.

Crime is a constant in South Africa, the security guard at Pick n Pay that looks like an American in Iraq, the "road blocks" in upmarket suburbs and the five inch thick plated glass protecting the cashier, chips and chocolates at the petrol station.

Standard Bank South Africa CEO Sim Tshabalala says crime is a "massive operational cost", with Capitec's Carl Fischer agreeing and using crime as justification for the recent large increases in bank fees related to cash transactions.

So what does a hit on a branch or ATM cost? Up to R1m is the word from Tshabalala and Fischer. An ATM can hold several thousands of rands in cash, so is a tasty target for criminals.

Fischer notes that Capitec has experienced some violent run-ins when transporting cash to ATMs and branches. He cites a number of times when guards just crossing the street with suitcases of cash get shot at and attacked.

"They are very well organised, professionally run hit squads if I may call them that," comments Fischer. The problem with cash being taken while in transit is that Capitec has to self-insure it, so it is a direct loss.

Fischer notes that near the end of the year one gets into the "silly season" where the number of incidents rises. In the last three months of 2009 Capitec suffered between 15 and 20 attacks.

Tshabalala recounts a video he saw of employees cowering in the corner of a branch while robbers broke through the wall of the branch, the entire attack perfectly timed to be done before the heavy security could arrive.

He cautions against thinking SA is a uniquely bad place though, explaining that spectacular attacks happen in Europe too. He tells the story of thieves using a bazooka to take out an armoured car in Belgium in 2005.

He says "we're not unique [when it comes to bank attacks] and in fact compared to some places we're better... our specialised police teams are good." Tshabalala also notes that attacks have moved away from Standard Bank a bit due to a crackdown on security.

An example is the use of ATM shutters and even just closing some ATMs down. This didn't stop Standard Bank from rolling out 13% more ATMs from the end of 2008 though.

The cost of crime prevention to Capitec runs in the order of 15% of the cost of the distribution infrastructure, which Fischer says is actually quite low due to the low amounts of cash held at its branches.

Write to Chris Blaine: chris@moneyweb.co.za

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