NCBA Group has revealed that it opted for South Africa’s Nedbank Group as a strategic investor after snubbing other bidders, citing its preference for minimal disruption to its business, staff, and brand as the key deciding factors.
The lender disclosed on Thursday that it had, over time, attracted interest from multiple suitors but ultimately settled on Nedbank, ending months of market speculation that it would be acquired by Standard Bank Group through its Kenyan subsidiary, Stanbic Holdings.
NCBA chief executive John Gachora said the board prioritised a transaction that would preserve the bank’s identity and avoid a “painful integration” process that has characterised past mergers in the region.
However, Mr Gachora steered clear of the question of whether Standard Bank had tabled any offer, maintaining that the “rumour did not come from us” and that he cannot disclose “who, what, and how” of approaches that did not “mature to levels I can disclose.”
Bloomberg News had reported in October last year that Standard Bank had authorised Stanbic Holdings to engage NCBA with a goal of concluding an acquisition deal.
“We have built over time what I think is a fantastic brand and one of the most highly rated financial institutions in this region. And because of that, we do attract a lot of interest. From time to time, we get approaches, and we have to examine and review the approaches we get and make decisions,” the NCBA boss said.
“I cannot tell you [who else expressed interest], but when we examined the Nedbank conversation, it met the merit for us to want to recommend it to our shareholders, and that is how we got here” he added.
Nedbank has tabled an offer to acquire a controlling 66 percent stake in NCBA in a transaction valued at 13.9 billion rands (about Sh109.9 billion), to be settled through a mix of cash and Nedbank shares. Top NCBA shareholders with a stake of 71.2 percent are backing the deal.
Mr Gachora said a major consideration for NCBA was the fact that Nedbank has no operating banking presence in the markets where NCBA operates, apart from a representative office in Nairobi.
“Nedbank does not have a presence in the markets where we operate except for a representative office in Nairobi, and therefore we will not be going through a painful integration of either systems, policies, or people,” he said.
“This, therefore, makes it a much easier transaction for our staff and customers. This was a big consideration for our board in considering what kind of transaction they would be willing to recommend to shareholders,” Mr Gachora said.
Several mergers and acquisitions in the market — including the merger between Commercial Bank of Africa (CBA) and NIC Group that resulted in the formation of NCBA — were accompanied by name changes, branch closures or relocations, job losses and major system integrations, often disrupting employees and customers.
Under the proposed transaction, NCBA will retain its existing board structure, with Nedbank nominating at least two directors to the NCBA board, while the current NCBA shareholders will appoint one representative to sit on Nedbank’s board.
“There will not be any overlaps between us (NCBA) and Nedbank, and therefore, we do not envision our employees being affected negatively. In fact, this creates opportunities for employee development, training, and growth since we will be an important subsidiary for Nedbank,” Mr Gachora said.
Under the proposed partnership, Nedbank intends to use NCBA as its cornerstone investment in East Africa, with ambitions to expand across the region.
Mr Gachora said the plan is to scale up operations in Kenya, Uganda, Tanzania and Rwanda, expand digital offerings, and explore opportunities in other parts of East Africa, including the Democratic Republic of Congo and Ethiopia.
