Pan-African lender, Ecobank, is expecting South Africa’s Nedbank to convert a $285m loan to shares in Ecobank before the end of the year.
Ecobank’s Chief Executive Officer, Albert Essien, on Monday said he was ‘confident’ Nedbank would exercise the conversion option and also top up the conversion amount with $206m to give it a 20 per cent stake in Ecobank.
After the Nedbank deal, Ecobank is also expecting its capital adequacy ratio to hit 18.7 per cent of assets by year-end, up from 17.5 per cent in the first six months of the year, Essien said.
“The Nedbank stake is capped at 20 per cent. If they do convert … I think that will strengthen the business relationship that we have (had) since 2008,” Essien told an analysts conference call on its half-year results, according to Reuters.
“The conversion will trigger reciprocal board seats. We see it as very positive and we expect that it will happen.”
Nedbank’s Chief Executive Officer, Mike Brown, had told Reuters two weeks ago that it had until November to decide if it would take the 20 per cent stake in the Togo-based bank, under a strategic alliance it has with Ecobank.
Shares in Lagos-listed Ecobank, which is up 6.3 per cent this year, rose 2.79 per cent on Monday to N17.20 each.
Essien also said he expected another institution EIB to convert about $58m of debt into shares.
Last month Ecobank, which has a presence in 36 African countries, reported 27 per cent rise in its first-half pre-tax profit to N41.67bn.
Chief Financial Officer, Laurence do Rego, said on the conference call that the lender was aiming for a 15 per cent growth in lending in 2014, after it achieved eight per cent in the first half, of which Nigeria accounted for 40 per cent of total loans.
Essien said Ecobank had recently set up operations in Mozambique and secured a banking licence in Angola.
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