Nedbank seals R13.9 billion deal to add 60 million clients

Nedbank has announced that its acquisition of a 66% shareholding in East African giant NCBA Group is complete. 

This makes NCBA a subsidiary of Nedbank and gives the South African lender access to 60 million new clients in a fast-growing region. 

The deal marks the beginning of a new era for Nedbank, with it being the lender’s first expansion into East Africa. 

Nedbank was historically exposed to the rest of Africa through its 21.1% stake in West African-based Ecobank Transnational Incorporated. 

This investment was based on a forecast boom in the West African economy, with particularly strong growth in Nigeria. 

However, this boom never materialised due to plummeting oil prices, which undermined the business case for the deal and forced Ecobank to turn to shareholders for recapitalisation. 

Nedbank CFO Mike Davis explained to Daily Investor that it did not want to have to plough more capital into Ecobank or risk its stake being diluted. Thus, it sold its investment. 

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. 

However, this has changed dramatically with the NCBA deal, which Standard Bank and other competitors to Nedbank were reportedly eyeing. 

“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. 

“By connecting two strong banking platforms across Southern and East Africa, we are creating new opportunities for our clients and shareholders.”

NCBA will continue to be listed on the Nairobi Securities Exchange, remain independently governed and retain its trusted brand and local leadership team. 

Shareholders representing 79.9% of NCBA’s shares in issue accepted the offer. Under the terms of the transaction, eligible NCBA shareholders will receive consideration in accordance with their settlement option. 

Some shareholders will receive a combination of new Nedbank ordinary shares and cash, while others will receive cash only.  

Nedbank on the front foot

Nedbank is acquiring a banking giant in its own right, with the NCBA deal set to add 60 million clients across Kenya, Uganda, Rwanda, and Tanzania.

Crucially, all of these economies are growing faster than South Africa, Nedbank’s home market.  

In its analyst presentation following the first half of its 2026 financial year, Nedbank revealed that NCBA, as a fully-fledged subsidiary, will contribute 11% of Nedbank’s earnings. 

This is a large chunk for a bank that has traditionally operated with 90%+ of its in South Africa. Combined with the rest of Nedbank’s African operations, 14% of the bank’s earnings would come from outside of South Africa. 

Davis said that investors will now have to change how they think about Nedbank, with it being a Southern Africa-East Africa play and not a South African-only institution. 

“We would like that to be 20% of our earnings. Some part of the acquisition into East Africa was to diversify earnings,” Davis explained. 

“We have made it clear, though, that we have no interest in being a Pan-African organisation. The focus is on Southern and East Africa. Our first step will be to build that to an 80-20 split.” 

This will change Nedbank’s earnings potential and how investors view the bank, as it is finally set to gain exposure to fast-growing economies across the rest of Africa. 

As Nedbank increases its exposure to faster-growing regions, its earnings should reflect that, and investors may change their view of the traditional South African bellwether. 

However, Davis has acknowledged investor caution given Nedbank’s previous investment in Ecobank and how that played out. 

The acquisition of NCBA is completely different in Nedbank’s mind, as it is now a subsidiary of the South African lender. 

It is also vastly different thanks to the jurisdictions in which NCBA operates. 

“We really like East Africa. You have to look at the jurisdiction in which you think you can do business. We spent a lot of time with the management team and on the ground,” Davis said. 

“You look at where they operate in Kenya, Tanzania, Uganda, and Rwanda. Those are areas we are very comfortable doing business in and areas whose growth will far exceed South Africa’s.” 

Nedbank’s initial focus will be on integrating the business into the group, and then it will go after the low-hanging fruit. 

In particular, Davis said there are big wins on the table for Nedbank’s Corporate and Investment Banking (CIB) unit.

Traditionally, Nedbank’s crown jewel, CIB, is expected to play an active role in dealmaking in the region. 

The CIB unit will lead the expansion and look to finance infrastructure development, bank South African corporates, and win investment banking deals. 

This will be followed by Nedbank’s other units, which may have a harder time generating immediate value in East Africa.