Capitec's acquisition of Mercantile Business Bank has been formally approved by Minister of Finance Tito Mboweni and other regulatory authorities.

Mercantile was offered for sale by its shareholder, Caixa, a Portuguese bank, because it is divesting from non-core operations outside of Portugal as part of its recapitalisation plan.

According to Capitec, the acquisition of Mercantile will fast track its (Capitec's) objective to expand its focus to a broader bank strategy. For now, the two banks will be run independently with retail clients served in Capitec branches and business banking clients referred to Mercantile.

"This brings new opportunities for both Capitec and Mercantile...for small business owners and entrepreneurs as we build Capitec's business banking offering off the 'firm foundation' of Mercantile," Capitec said in a statement issued on Wednesday.

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Mercantile's core business offer is banking for established small to medium sized enterprises and entrepreneurs. In the view of Capitec, it is, therefore, well positioned to align with Capitec Bank's business banking strategy.

Capitec's plan is to grow Mercantile Bank into Capitec's Business Bank. Capitec believes this will create exciting opportunities for both Mercantile and Capitec employees.

"Our need for skilled people will significantly increase to achieve this desired growth," said Capitec.