African Bank sets its sights on Ubank
The proposed R80m ($4,7m) acquisition falls in line with the bank’s strategy of ‘building a scalable, diversified and sustainable business’.
African Bank on Friday announced its plans to acquire a majority stake in Ubank – a basic financial services provider with a presence in mining and rural communities – for R80 million.
African Bank’s potential acquisition of Ubank will, however, not include the bank’s legal assets nor any of its residual assets or liabilities, it said in a Sens statement.
According to African Bank, the acquisition aligns with its 2025 strategy which seeks to build “a scalable, diversified and sustainable banking business with a compelling listable proposition”.
“The lending book of Ubank can be efficiently absorbed into African Bank’s larger lending book,” the bank said.
“African Bank has been working to diversify funding sources and has added significant retail deposits over the last few years. The addition of Ubank’s deposit base would accelerate this effort.”
Earlier this year, the South African Reserve Bank (Sarb) placed Ubank under curatorship after the bank faced capital and governance challenges. Auditing firm KPMG was at the time appointed to oversee the curatorship and manage the bank’s operations.
African Bank says that should the transaction be successful, Ubank customers would have immediate access to its distribution footprint.
“Ubank customers will be migrated to African Bank’s MyWORLD product which offers a higher degree of personalisation, lower fees and greater competitive value.”
The deal is still subject to regulatory approvals and will need to receive the green light from Finance Minister Enoch Godongwana.