Nedbank’s R13.9bn NCBA East Africa deal complete

Nedbank has finalised its deal to buy 66% of NCBA, a full-service Tier 1 banking group based primarily in Kenya, with branches in Uganda, Tanzania, Rwanda and Côte d’Ivoire.

Nedbank says the R13.9 billion transaction advances its African growth strategy by adding scale and diversification in high-growth East African markets, with Kenya serving as a regional financial hub. 

The announcement, made on Monday evening, confirmed that all regulatory hurdles for the deal, first announced in January, had been cleared.

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The deal was funded by around R3 billion in cash and the issuance of Nedbank newly issued shares to NCBA shareholders. 

Nedbank announced in July that 79.9% of NCBA shareholders had accepted its offer. On 1 September, it received approval for the transaction from the Central Bank of Kenya.

NCBA serves more than 60 million customers through over 120 branches and is Africa’s largest banking group by customer numbers.

Nedbank Group chief executive Jason Quinn describes the deal as a major milestone for both organisations. “This landmark transaction establishes a significant presence for Nedbank in East Africa and marks a decisive step forward in our African growth strategy.”

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“By connecting two strong banking platforms across Southern and East Africa, we are creating new opportunities for our clients and shareholders, while supporting greater trade, investment and growth across the continent.

“We are proud to welcome NCBA to the Nedbank Group.”

NCBA will remain listed on the Nairobi Securities Exchange, with independent governance, its established brand and its existing local leadership team.

“The business will remain locally anchored and locally led, while gaining the scale, expertise and investment capacity to support further innovation, enhanced client service and solutions, career growth and broader economic opportunity across the region,” Quinn adds.

As Nedbank currently operates only a representative office in the region, no in-country operational integration will be required.

NCBA Group chief executive John Gachora says: “This is a proud moment for NCBA … NCBA has built a strong East African brand, anchored on customer centricity and innovation.

“With the backing of Nedbank, we are now poised to boldly go after opportunities across the East African region, expand our footprint and bring to market a more sophisticated set of products.

“This next phase in the chapter of NCBA, as a Nedbank company, will be one to watch.”

Anchor Capital investment analyst Keagan Higgins says: “We think it is an important deal for Nedbank, although today’s announcement is really just confirmation of what was already expected.”

“Nedbank has historically had a much smaller African footprint than Standard Bank and Absa, particularly outside Southern Africa. NCBA gives it an established presence in Kenya and the broader East African market, without having to build that presence from scratch.

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“NCBA is also a good business in its own right, with a strong track record of profitability and returns.

“The deal also reflects a more focused African strategy following Nedbank’s exit from Ecobank. Rather than holding a minority stake in a much broader banking group, Nedbank will now have control over an established and profitable business.

“It does not suddenly put Nedbank on the same footing as its larger peers across Africa, but it is a meaningful step in that direction,” Higgins adds.

Absa operates in 11 countries outside South Africa, including Kenya, while Standard Bank has a presence in 21 African markets.

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