The latest entrant in South Africa’s crowded banking sector aims to break even in 2028.

OM Bank, set up by Old Mutual, received its licence from the South African Reserve Bank’s Prudential Authority on Friday, Old Mutual CEO Iain Williamson said in an interview on Tuesday. The bank will be fully functional by the fourth quarter, he said.

The new bank will report losses of as much as R1.3-billion until it breaks even, Williamson said. Almost 85% of the nation’s residents have bank accounts. Apart from the six established lenders, OM Bank is likely to face competition from new firms including one controlled by billionaire Patrice Motsepe, and fintech companies.

Old Mutual spent about R2.8-billion to build the bank and to secure a deposit-taking retail banking licence. The firm currently has 10 employees as clients and will soon target “Old Mutual money account cardholders, and then the full public, in probably the early part of quarter four”, Williamson said.