Royal Merchant Bank (RMB) Holdings is an investment company, with its main holding being a 34% interest in FirstRand Bank Limited, one of southern Africa’s premium banking groups. The group’s history can be traced back to the consolidation of Rand Consolidated Investments and Rand Merchant Bank in South Africa in 1987, giving the group a wide interest in the financial services sector. RMB Holdings shares were listed for sale on the Johannesburg Stock Exchange (JSE) in 1992 and the group currently trades under the ticker RMH, with a market cap of R78 billion.

The group has a significant influence on FirstRand Bank (which has a market cap of R 300 billion) through non-executive representation on boards, in line with RMB’s decentralised management philosophy. FirstRand Bank currently has control of First National Bank, Wesbank, Royal Merchant Bank and Ashburton Investments.

The group recently announced that it will expand its current single investment in FirstRand through the purchase of a 25% stake in leading South African property group Atterbury.

The live online stocks chart shows that RMB Holdings share price has been fairly stagnant on the JSE, as a result of the tough economic conditions.

RMB largely aims to be a value adding long-term partner to FirstRand bank, enabling strong leadership and innovation in the banking and financial services sectors. The group positions itself amongst the key shareholders, aiming to buy heavily into decision-making on a strategic level.

The group has three strategic priorities, comprising portfolio optimisation, structural benefits and growth. In line with RMB’s vision of long-term growth, portfolio management includes holding investments for as long as needed to optimise their value. Value is created through growth of intrinsic value and paid dividends, with the objective to deliver RMB share price performance that is above market average. The group is continually seeking to contribute to the diversification of FirstRand’s portfolio and reach throughout South Africa and globally, to maintain balance between growth, yield and consistent RMB share price.

In the weak local and international economic environment, FirstRand has maintained respectable performance, with FNB, RMB and Wesbank all outperforming the market. The group’s intense buy in to technological innovation has led to great success in attracting new customers.

Meanwhile, the Atterbury investment seeks to establish a diverse variety of entrepreneurial and owner-managed businesses with good track records of managing and building property portfolios in the commercial, retail and industrial sectors.

RMB Holdings has recorded good performance in the face of the economic downturn, consistently reporting profit growth and distributing higher dividends. FirstRand bank is continuing to attract new customers and is undoubtedly one of the most stable powerhouses in South Africa’s banking industry.

All the data suggests that RMB Holdings share price will climb in the near future. This is echoed by the consensus forecast of investment analysts, who are recommending RMB stocks as a good buy, especially since they are currently hovering at lower than normal prices due to the recession.

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