Nedbank has completed its acquisition of a 66% stake in East African banking group NCBA, giving the South African lender a major foothold in one of the continent’s faster-growing regions.
The transaction makes NCBA a subsidiary of Nedbank and gives the South African group access to around 60 million clients across Kenya, Uganda, Tanzania and Rwanda.
It is Nedbank’s first major expansion into East Africa and marks a significant shift in its African growth strategy.
Nedbank previously had exposure to the continent through a 21.1% stake in West African banking group Ecobank Transnational Incorporated. However, the investment became less attractive as weaker oil prices affected expected economic growth and Ecobank required additional capital.
Nedbank eventually sold its Ecobank stake, leaving it heavily concentrated in South Africa. According to the source, around 91% of Nedbank’s assets were held in the country.
The NCBA transaction now gives the bank greater exposure to economies that are expected to grow faster than South Africa.
“This landmark transaction establishes a significant presence for Nedbank in East Africa and marks a decisive step forward in our African growth strategy,” Nedbank CEO Jason Quinn said.
NCBA will remain listed on the Nairobi Securities Exchange and will retain its brand, local leadership and independent governance.
Nedbank CFO Mike Davis said the group does not intend to become a pan-African bank, but wants to build a stronger Southern and East African presence. The bank is targeting an 80/20 earnings split, with 20% of earnings coming from outside South Africa.
The acquisition is expected to contribute about 11% of Nedbank’s earnings, taking the group’s total earnings contribution from outside South Africa to around 14% when its existing African operations are included.
Nedbank’s Corporate and Investment Banking division is expected to play an important role in the next phase, particularly through infrastructure financing, supporting South African companies operating in the region and pursuing investment banking opportunities.
For Nedbank, the NCBA deal represents more than an expansion in size. It gives the group exposure to East African markets while reducing its reliance on the relatively slow-growing South African economy.
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