Ecobank May Delay Nedbank Option to Focus on African GrowthRenee Bonorchis
Ecobank Transnational Inc. may shelve plans to buy a stake this year in South Africa’s Nedbank Group Ltd. to focus on its business in 33 other African countries, said Chief Executive Officer Thierry Tanoh.
“We can capture African growth and increase efficiency at the same time and when that’s done, there’s the option with Nedbank -- it’s not the time to talk about it now,” Tanoh, who became CEO in January, said in an interview at the World Economic Forum in Cape Town yesterday.
Ecobank Chairman Kolapo Lawson said last year that the Lome, Togo-based lender wanted to exercise an option to buy a stake in Johannesburg-based Nedbank at the end of 2013. Tanoh wants to focus on increasing profitability elsewhere in the continent after first-quarter earnings climbed 26 percent.
“First-quarter figures are a snapshot of where we could go,” said Tanoh, adding that Ecobank plans to cut funding costs by refinancing debt, issuing bonds or attracting new investors.
Nedbank, which is controlled by Old Mutual Plc, loaned Ecobank $285 million at the end of 2011. Both lenders have the right to take a stake of as much as 20 percent in the other from the end of 2013. Nedbank, South Africa’s fourth-biggest bank, has said it intends to use the option to gain access to the continent’s most geographically diverse lender.
Should Ecobank decide against buying a stake, it won’t impact the South African bank’s business or a decision to take up its own rights, Nedbank CEO Mike Brown said in an e-mailed response to questions today.
‘No Expiration Date’
There is no expiration date on Ecobank’s option to take a stake in Nedbank, according to Tanoh.
Forging partnerships with insurers in Africa and building an investment banking team are also part of the Ecobank’s plans, said Tanoh. The lender is also looking for ways to enter Mozambique and Angola, he said.
Ecobank shares have climbed 35 percent this year in Lagos trading compared with a 26 percent gain for the Nigerian Stock Exchange All-Share Index.