in , , , , , , ,

African Bank to buy Ubank before it goes public on the JSE


The acquisition of Ubank by African Bank would result in the potential addition of as many as 4.7 million retail customers and the expansion of African Bank’s activities in preparation for the company’s listing on the JSE.

The cash transaction is worth R80 million and comes just three months after African Bank agreed to buy Grindrod Bank for R1.5 billion to boost its business-lending activities. Ubank is one of the smallest locally registered retail lenders in South Africa, and many of its customers live in areas where major urban centers do not dominate.

African Bank has been making efforts to diversify its sources of funding and, throughout the past few years, has added large amounts of customer deposits. On Friday, the lender issued a statement announcing its acquisition of Ubank. “Adding Ubank’s deposit base would hasten this attempt.”

African Bank was once the largest lender of unsecured loans to the low-income market in the country. However, the bank was forced to file for bankruptcy in 2014 due to an increase in bad debts and a market rejection of its bond sales. It was the sole way by which it could raise funds then. The nation’s central bank intervened and currently owns a fifty percent ownership in African Bank, which it intends to sell off through a public listing.

CEO Kennedy Bungane stated in May that a listing on the JSE might not occur within the next year because the lender has not yet achieved the diversification, scale, and sustainability necessary to make it a viable proposition.

African Bank has also been mentioned as a possible contender for a new national bank; however, finance minister Enoch Godongwana has stated that the government does not have the funds necessary for such an endeavor.

Ubank has experienced some of its financial difficulties. Before it was put under administration in May due to concerns over corporate governance, internal control weaknesses, and insufficient capital, it was partially managed by mineworkers. The administration was brought on because of these concerns. It was established more than forty years ago to provide mineworkers with a savings fund, but in the early 1990s, it transitioned into operating as a commercial bank.




What do you think?

0 points
Upvote Downvote

Total votes: 0

Upvotes: 0

Upvotes percentage: 0.000000%

Downvotes: 0

Downvotes percentage: 0.000000%

Leave a Reply

Your email address will not be published. Required fields are marked *

Ecobank’s new fintech challenge has a prize pool of $50,000

The Cameroonian startup Taaply, which develops and sells digital business cards, has successfully acquired $500,000 in funding.