Absa creating a R50 billion giant outside of South Africa

Absa is nearing a deal to combine its banking interests in Tanzania as the lender looks to increase the scale of its East African businesses, according to people familiar with the matter. 

The current plan is for National Bank of Commerce, 55% owned by Absa and 30% by Tanzania, to take over the assets of Absa Bank Tanzania, said the people, who asked not to be identified.

A combined entity will have about $3 billion in assets, making it the nation’s largest lender behind CRDB Bank and NMB Bank, said the people. 

Absa declined to comment on the matter. The lender, which has been in talks with the government, could see the plan materialise in the coming months, although there’s no guarantee that a final pact can be reached, they said.

The continent’s third-largest lender is consolidating and expanding its position in East Africa, where its business is growing faster than in its home market of South Africa, said the people. 

NBC serves a large number of public entities in Tanzania. The nation is home to about 70 million people, and its economy will likely grow 5.9% this year, according to the International Monetary Fund.

Absa also started an offer to raise its stake in its Kenyan business, giving the unit — which has total assets of more than $4 billion — an equity value of close to $1.5 billion. 

In Uganda, the South African bank received approvals to buy Standard Chartered’s wealth and retail business, clearing the way to expand its business in that nation.

The broader group has a market value of $11.9 billion and assets of about $136 billion.

The approach reflects Absa’s preference for increasing exposure to high-growth regional banking franchises. 

During a visit to Tanzania this month, CEO Kenny Fihla said it’s “a market of immense potential and our presence here must reflect more than just financial services — it must reflect partnership, purpose, and progress.”