Access Bank, Nigeria’s biggest lender, has bought a controlling stake in South Africa’s Grobank for about $60 million and will shore up the bank’s capital, its Chief Executive Officer, Herbert Wigwe, said on Tuesday, becoming the first Nigerian lender to venture into South Africa.
Wigwe, who did not disclose the exact stake size, told CNBC Africa Television that Access Bank took on both equity and debt in the South African bank, part of a regional expansion to tap into correspondent and trade banking deals on the continent.
Nigerian lenders have been seeking new avenues to boost profit amid slow economic growth at home, a drop in government bond yields and a rise in restructured loans due to the impact of the COVID-19 pandemic.
While the latest deal brings its African presence to nine countries, Access Bank is expanding across the continent to counter stagflation at home and dollar shortages that have frustrated businesses.
Wigwe said:
We have a full retail banking license in South Africa.
We will pursue a wholesale banking franchise. We will pursue trade finance.
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He also added that Grobank is focused on the agribusiness and foods sector in South Africa.
South Africa’s banking sector is dominated by four top lenders that vie to grow profits in an economy that has been weakened further by the COVID-19 pandemic and seen rising impairments for bad loans.
Wigwe acknowledged the competitive landscape in South Africa but said he saw opportunities to connect the region, especially with the launch of the Africa free-trade area this year, and provide banking services to customers across the continent.
With more than $16 billion of assets and a focus on corporate and retail banking, Access bank is restructuring its Nigerian business into a holding company. Wigwe said the lender will support Grobank with more capital, but did not give details.
Access Bank, in August 2020, agreed to buy Zambia’s loss-making Cavmont Bank and in January last year it acquired Kenya’s Transnational Bank with the aim of pursuing more acquisitions on the continent.