Nedbank one step closer to 60 million new clients

Nedbank has achieved its targeted 66% holding in East African banking giant NCBA, giving the South African bank access to 60 million new clients. 

This deal, valued at R13.9 billion, represents a significant change in how Nedbank approaches its expansion on the African continent. 

Historically, the bank was exposed to West Africa through a 21.1% stake in Ecobank (ETI) as it believed the economies of the region were poised to boom. 

The forecasted boom never occurred, undermining the business case for the deal and forcing ETI to turn to shareholders to be recapitalised. 

“When we did the ETI transaction, we effectively bought a 21.2% stake in a business in 2014 that generated a third of its income from Nigeria,” Nedbank CFO Mike Davis told Daily Investor. 

“At that stage, Nigeria was doing well. However, in the following years, the oil price fell to $30 per barrel, and Nigeria has had significant issues ever since.” 

Nedbank was concerned that it would have to participate in a recapitalisation of ETI or see its stake diluted. Neither option was appealing, and it chose to sell its share in the West African bank. 

This did leave the South African bank without any exposure to faster-growing economies on the continent, which many of its peers have leveraged to grow their businesses. 

As a result, Nedbank became heavily exposed to the South African economy, with 91% of its assets being held in the country. 

This makes the bank’s fortunes closely tied to that of South Africa’s economic performance and investment in the country. 

With South Africa’s economic growth averaging 1% per annum for the past 15 years, this situation is not great for Nedbank and its shareholders. 

In the meantime, its peers in Standard Bank, FirstRand (FNB), and Absa have grown their footprint in Africa significantly. 

Standard Bank, for example, operates in 21 markets across the continent and is heavily exposed to faster-growing economies in East Africa. 

“The region plays an important role in the relationships between the continent and other parts of the world, and we want to facilitate that activity,” Standard Bank CEO Sim Tshabalala said. 

“A bank grows on the basis of growth in GDP, and financial deepening is increasing in Kenya, and we want to be part of that,” he said. 

East African economies are projected to grow at an average of 6.1% this year, outpacing 3.2% for the world. 

The R13.9 billion deal

Nedbank needs to play catch-up with its peers who already have a presence in East Africa and other parts of the continent. 

This pushed it to try to find a way to use its strong balance to acquire an established player in the region and avoid having to build its own offering from scratch. 

East African lender NCBA was the perfect candidate. It is a tier-one bank in Kenya and has exposure to Tanzania, Rwanda, and Uganda. 

The bank is a giant in its own right, with 60 million clients and managing R84.4 billion in assets. Nedbank said that the bank distributes R126.9 billion in loans on an annual basis. 

In January 2026, Nedbank announced that it had made an offer to acquire 66% of NCBA shares in a deal valued at R13.9 billion. 

The bank will be funding 80% of the transaction by issuing new Nedbank shares to those who take the offer, and the remaining 20% will be paid in cash. 

On 21 July, Nedbank told investors that its offer had been accepted by enough shareholders for it to reach the 66% mark. 

The offer closed on 10 July and was accepted by NCBA shareholders owning 79.9% of the bank’s total shares in issue, Nedbank said. 

“Based on the indicative acceptances, Nedbank has achieved its targeted 66% shareholding in NCBA,” the bank said. 

This means Nedbank will now issue 43.6 million new ordinary shares and give them to NCBA shareholders who accepted the offer. It will also make a cash payment of R2.9 billion. 

The deal fundamentally changes Nedbank’s approach to expansion in Africa, with Davis explaining that comparing it to ETI is chalk and cheese. 

“It is a Kenyan-based business in a market that we understand well. It is a market that is well-regulated and a business that is extremely well run with a great management team,” Davis said. 

“If you look at the offer, it will make NCBA a subsidiary of Nedbank. It is not an associate as ETI was. It will be a fully-fledged subsidiary under Nedbank’s control.”