SOUTH AFRICA – African Bank, a retail bank, has announce that it is the successful bidder to acquire the majority of Ubank’s disclosed assets and liabilities and to take on its employees on a going concern basis on the closing of the proposed transaction.
Ubank is a well-established financial services provider with a strong presence across selected mining and rural communities.
Ubank has continued to operate in the ordinary course of business, despite it being placed under curatorship on 16 May 2022. African Bank will not be acquiring the Ubank legal entity, and any residual assets and liabilities will remain with its legal entity.
The proposed transaction fits into African Bank’s Excelerate25 strategy of building a scalable, diversified and sustainable banking business with a compelling listable proposition, which is true to its founding philosophy of being “a bank for the people, by the people, serving the people”.
“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,” African Bank chief executive officer, Kennedy Bungane, said.
African Bank will get a foothold in the mining sector, where Ubank has a strong market position and distribution footprint. African Bank is also looking to migrate Ubank’s customers to its transactional bank account, MyWORLD.
Bungane said that while the lack of capitalisation in Ubank and the fact that it was making losses made the company unattractive to a certain extent, African Bank believed that its strong retail deposits, transactional accounts and partnership with MTN’s Mobile Money would accelerate the diversification and growth of its business.
“Their abilities, which are largely deposits from customers, are quite attractive at about R4.7 billion. They are quite sticky,” said Bungane.
“They’ve got very loyal customers, largely mineworkers. They’re very attractive to us in terms of helping African Bank in its mission to reduce its cost of funding and diversify its funding mix, in favour of retail deposit over and above wholesale funding.”
He said Ubank’s loan book was also “very good” but significantly small. African Bank can easily digest it into its balance sheet.
Ubank’s market position within the mining sector and distribution footprint complement African Bank’s existing national offering, and will provide Ubank’s customers with immediate access to African Bank’s nationwide distribution footprint.
Ubank’s customers will be migrated to African Bank’s MyWorld product, which offers a higher degree of personalisation, lower fees, and more competitive value.
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