Nedbank’s Bid for NCBA Signals a New Phase of Cross-Border Banking in East Africa

South Africa’s Nedbank Group has set its sights firmly on East Africa, announcing plans to acquire a controlling stake in Kenya’s NCBA Group in a transaction that could reshape the region’s banking landscape. The proposed deal, valued at roughly 13.9 billion rand—equivalent to about KSh110 billion—would see Nedbank take a 66 percent ownership stake in NCBA through a combination of cash and shares, marking one of the most significant cross-border banking transactions in the region in recent years.

If completed, the acquisition would not only represent Nedbank’s most decisive move into East Africa to date, but also position Kenya as a central gateway for its ambitions across a fast-growing, increasingly interconnected regional market.

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A Landmark Transaction in African Banking

Nedbank, one of South Africa’s largest lenders by assets, disclosed that it has made an offer to purchase two-thirds of NCBA Group in a transaction structured as 20 percent cash and 80 percent equity. The equity portion would be settled through the issuance of new Nedbank ordinary shares listed on the Johannesburg Stock Exchange (JSE), based on a reference share price of 250 rand.

Under the proposal, NCBA shareholders who choose to participate in the tender offer would receive part of their consideration in cash, with the remainder paid in Nedbank shares. Importantly, the remaining 34 percent of NCBA shares would continue to trade publicly on the Nairobi Securities Exchange (NSE), ensuring that the bank retains a strong local shareholder base and public market presence in Kenya.

Market reaction was swift. NCBA shares jumped 8 percent on the NSE following the announcement, reflecting investor optimism about the valuation and strategic logic of the deal.

How the Deal Is Structured

The transaction values NCBA at approximately 1.4 times its book value, a premium that underscores Nedbank’s confidence in the bank’s balance sheet, profitability, and regional growth prospects.

By comparison, NCBA was trading at about 1.2 times book value before the announcement, according to data from stockbrokers. Only banks with substantial foreign ownership—such as Standard Chartered Bank Kenya and Absa Bank Kenya—commanded higher valuation multiples at the time.

The consideration structure has been carefully designed to accommodate regulatory and shareholder realities. According to NCBA Group Managing Director John Gachora, shareholders whose converted holdings would amount to fewer than 200 Nedbank shares—or those unable to hold offshore assets for regulatory reasons—will receive their consideration entirely in cash.

The transaction is expected to close in the second half of 2026, subject to regulatory approvals in multiple jurisdictions.

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NCBA: A Regional Banking Powerhouse

Founded in its current form in 2019, NCBA Group emerged from the merger of NIC Group and Commercial Bank of Africa (CBA)—two institutions with distinct strengths. The combination created a diversified financial services group with a strong corporate and retail banking franchise, as well as a dominant digital lending platform.

Today, NCBA operates 122 branches across Kenya, Uganda, Tanzania, Rwanda, Ghana, and Ivory Coast, serving more than 60 million customers. While its physical branch network is concentrated in East Africa, its digital platforms extend its reach far beyond traditional banking boundaries.

The bank’s financial metrics underline its appeal. As of the third quarter of 2025, NCBA’s balance sheet had grown to KSh665 billion, supported by a deposit base of nearly KSh488 billion, which accounts for more than 73 percent of total assets. Loans stood at approximately KSh293 billion, representing 44 percent of assets.

Profitability has been equally robust. The group reported KSh16.4 billion in net profit, translating to a 2.4 percent return on assets, and has consistently delivered an average return on equity of around 19 percent since 2021—well above regional peers.

Perhaps most striking is NCBA’s dominance in digital lending. The group disburses more than KSh1 trillion in digital loans annually, an amount equivalent to nearly 1 percent of Kenya’s GDP, highlighting its central role in financial inclusion and consumer credit.

Nedbank’s Strategic Rationale

For Nedbank, the acquisition represents a calculated expansion into a region it views as strategically critical. East Africa offers a combination of demographic growth, rising incomes, and deepening trade links that align well with the bank’s long-term growth strategy.

Nedbank Chief Executive Jason Quinn described the transaction as a pivotal step in the group’s African expansion.

By pairing NCBA’s strong local franchise with Nedbank’s capital strength and expertise, the group sees an opportunity to build a scalable platform capable of supporting sustainable growth across multiple markets.

East Africa’s role as a trade corridor linking Africa with the Middle East, India, and Asia further enhances its appeal. Kenya, in particular, has positioned itself as a regional financial hub, supported by relatively advanced capital markets, regulatory frameworks, and digital infrastructure.

Kenya as the Gateway

A central theme of the transaction is the role of Kenya as a gateway to the wider East African region. NCBA’s headquarters in Nairobi, combined with its regional footprint, gives Nedbank immediate exposure to a market of roughly 190 million people with a combined GDP approaching USD300 billion.

Beyond NCBA’s existing footprint, Nedbank is also eyeing longer-term opportunities in neighbouring high-population markets such as Ethiopia and the Democratic Republic of Congo (DRC). Ethiopia’s population of 136 million and the DRC’s 110 million represent some of Africa’s largest untapped banking markets.

Taken together, East Africa, Ethiopia, and the DRC form an addressable market of approximately 436 million people, representing more than a quarter of Africa’s population and over USD500 billion in combined economic output.

Preserving Local Identity and Governance

Despite the scale of the transaction, both parties have emphasized continuity. If the acquisition is completed, NCBA will become a subsidiary of Nedbank, but it will retain:

• Its brand identity
• Local leadership
• Operational autonomy
• A separate listing on the NSE

This approach mirrors successful models used by other international banks operating in Africa, where local credibility and regulatory relationships are critical to long-term success.

For Kenyan regulators and customers, this assurance reduces concerns about foreign takeovers diluting local decision-making or redirecting capital away from domestic priorities.

Investor Perspective and Market Impact

From an investor standpoint, the proposed valuation has been broadly well-received. The 1.4x book multiple reflects confidence in NCBA’s earnings quality and growth trajectory, while the share-and-cash structure offers participating shareholders exposure to Nedbank’s broader African and South African operations.

For Nedbank shareholders, the deal represents a bet on higher growth markets at a time when South Africa’s banking sector faces more modest expansion prospects. While the issuance of new shares introduces dilution, management appears confident that long-term returns will justify the move.

Analysts have noted that NCBA’s strong digital lending platform, in particular, could be leveraged across other African markets, creating opportunities for product replication and cross-selling.

Regulatory and Execution Risks

Despite the strategic logic, the transaction is not without risks. Regulatory approvals will be required from authorities in Kenya, South Africa, and other jurisdictions where NCBA operates. Cross-border banking deals often face extended review timelines, particularly where systemic institutions are involved.

Execution risk is another factor. Integrating two banking groups across multiple markets, regulatory regimes, and corporate cultures is complex. While NCBA will retain operational independence, aligning governance, risk management, and reporting standards will require careful coordination.

There is also the question of macroeconomic volatility. Currency risk, political developments, and interest-rate cycles across East Africa could influence returns over time.

Why This Deal Matters

1. A Signal of Confidence in East Africa

Nedbank’s move sends a strong signal that East Africa remains attractive to large, well-capitalized international banks. At a time when global investors are increasingly selective, such a commitment reinforces confidence in the region’s long-term prospects.

2. Validation of Kenya as a Financial Hub

The transaction reinforces Kenya’s position as a regional banking and financial services hub. By anchoring its East African strategy in Nairobi, Nedbank underscores the city’s role as a gateway for capital, talent, and innovation.

3. Momentum for Cross-Border Banking

The deal highlights a broader trend toward regional consolidation in African banking. Scale matters, particularly as banks invest in technology, compliance, and risk management. Cross-border platforms can spread costs and unlock growth.

4. Boost to Capital Markets

Keeping NCBA listed on the NSE preserves liquidity and transparency, benefiting local investors and reinforcing confidence in Kenya’s capital markets.

5. Financial Inclusion at Scale

NCBA’s digital lending operations already touch millions of customers. With Nedbank’s backing, these platforms could be expanded and strengthened, deepening access to credit and financial services across the region.

Broader Implications for African Banking

The proposed acquisition reflects a shift in how African banking growth is being pursued. Rather than greenfield expansion, large banks are increasingly opting for strategic acquisitions that provide instant scale, local expertise, and established customer bases.

As regulatory standards rise and technology investment becomes more capital-intensive, smaller standalone banks may struggle to compete. Consolidation, when well-managed, can enhance stability and efficiency across the sector.

Looking Ahead

If approved and completed as planned, the Nedbank-NCBA transaction could become a benchmark for future cross-border banking deals in Africa. Much will depend on execution, regulatory cooperation, and the ability to translate strategic intent into operational success.

For now, the announcement has already achieved one outcome: it has firmly placed East Africa—and Kenya in particular—at the center of conversations about the future of African banking.

Conclusion

Nedbank’s proposed acquisition of a 66 percent stake in NCBA is more than a corporate transaction. It is a statement about the direction of African finance, the importance of regional scale, and the growing role of Kenya as a financial gateway to a rapidly expanding market.

By combining NCBA’s digital innovation and local reach with Nedbank’s capital strength and continental ambition, the deal has the potential to reshape banking across East Africa. Whether it ultimately delivers on that promise will unfold over the coming years—but its significance is already clear.

photo source: Google

By: Elsie Njenga

26th January, 2026