Nedbank to sell Ecobank stake as focus shifts to Southern and East Africa
Ecobank's operations in central and West Africa are exposed to some economies that have been pressured by unfavourable currency swings since Nedbank bought the stake in 2014.
In Nigeria, where Ecobank has a large operation, various South African clients have exited from the region, which has limited cross-sell opportunities, while collaborative benefits have not been forthcoming, Nedbank said.
Nedbank Chief Executive Jason Quinn said a review recognised the risks of continuing to hold onto the group's investment in Ecobank due to regulatory uncertainty and potential increase in capital requirements.
"The board has approved a formal plan to dispose of the investment, and we are currently engaging interested parties and, if a sale is concluded, it will be a clean deal," Quinn said in a statement.
Over the time that Nedbank has held an interest in Ecobank, associate income of 6.8 billion rand ($378.6 million) has been recognised; however, only 4 million rand has been realised through dividends received, the lender said.
As of June 30, the investment in Ecobank had a carrying value of 1.8 billion rand and a market value of 1.9 billion rand.
For the six months ended June 30, the bank's headline earnings, a profit measure, grew to 8.4 billion rand ($468 million) from 7.9 billion rand a year earlier.
The lender revised its 2025 forecasts citing a more difficult than expected South African business environment and change in its strategy regarding Ecobank.
"We now expect DHEPS (diluted headline earnings per share) growth for the year to be in low single digits and return on equity around 15%," Quinn said.
Shares of Nedbank slumped more than 5% at the market open.
($1 = 17.9624 rand)
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