Mercantile BEE discussions back on.

JOHANNESBURG - Small bank Mercantile (JSE:MTL) and small corporate bank Sasfin (JSE:SFN) have decided to call of their merger.   

The two announced they had signed a memorandum of understanding (MOU) about a potential merger in May.

Mercantile will now resume its BEE discussions to offload a 10% stake.

At the time of the announcement, Patrice Rassou, a banking analyst from Sanlam (JSE:SLM) Investment Management (SIM), said it seemed as if the Portuguese government was trying to sell down its majority stake in Mercantile. The merger made would have made sense, as Sasfin has excess capital and local expertise that will benefit Mercantile and enable the merger.

Rassou says that the benefits of the deal will depend on what businesses are viable in Mercantile, as well as any potential deal flow Sasfin can garner from Portugal.

Both companies recently revealed they had hit heavy weather and expected it to continue.

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