South Africa-based African Bank has won the bid to purchase majority of Ubank’s disclosed assets and liabilities for $4.8m (ZAR80m) in cash.
However, African Bank will not acquire Ubank’s legal entity and residual assets and liabilities.
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Upon completion of the transaction, which awaits regulatory nod, African Bank will take on Ubank’s staff “on a going concern basis”.
The takeover is expected to add over 4.7 million retail customers and expand African Bank’s operations, reported Bloomberg.
Ubank was placed under administration in May this year due to financial and corporate governance concerns.
African Bank, in a statement, said: “African Bank has been working to diversify funding sources and has added significant retail deposits over the last few years.
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By GlobalData“The addition of Ubank’s deposit base would accelerate this effort.”
A retail lender in South Africa, Ubank offers services mainly to the mining and rural communities.
The acquisition is said to align with African Bank’s vision of creating “a bank for the people, by the people, serving the people”.
Furthermore, the deal will give Ubank’s existing customers instant access to African Bank’s distribution footprint.
According to the company, Ubank customers will be migrated to African Bank’s MyWORLD product that ensures customisation, reduced fees and more “competitive value”.
African Bank CEO Kennedy Bungane said: “Ubank’s strong retail deposits, transactional accounts and partnership with MTN’s Mobile Money, will accelerate the diversification and scaling of African Bank in line with our mission to build a customer-centric, digital and data-enabled business that is diversified, scalable and sustainable.”
Over three months ago, African Bank decided to acquire Grindrod Bank for $88.75m (ZAR1.5bn) to strengthen its business lending portfolio.
In 2014, African Bank went into administration owing to rise in bad debts.
The country’s central bank that has a 50% stake in African Bank looks to offload the same through an initial public offering.
In 2020, African Bank chose Arctic Intelligence as its software partner for carrying out anti-money laundering as well as counter-terrorism financing enterprise risk assessments.
