Ecobank, Old Mutual 'must avoid overlaps'

Last week Nedbank's parent, Old Mutual, acquired Ecobank's 70% stake in Nigeria's Ocean Life, giving it the opportunity to sell insurance to up to four-million Ecobank customers in Nigeria, Africa's most populous nation.

Business Day understands Oceanic Life, which is a unit of Oceanic Bank now owned by Ecobank, is valued at about 20m. This means Old Mutual could pay about $15m for the 70% as the remaining 30% will be kept by Ecobank.

Ecobank CEO Arnold Ekpe, speaking on the sidelines of the Ernst & Young Strategic Growth Forum for Africa in Cape Town yesterday, said his bank's alliance with Nedbank and memorandum of understanding with Old Mutual made it easier to give the South African insurer first preference to buy.

"Old Mutual was a preferable buyer and Ecobank wanted a big partner with resources and a company that understands insurance. It's an excellent deal for all parties."

Ecobank has branches in 30 west, central, east and southern African countries, and half of its 7,8-million clients are in Nigeria. Mr Ekpe said Ecobank had divested its majority stake in Oceanic Life as insurance was not core to its business.

Ecobank was looking at facilitating a distribution platform for Old Mutual in Ghana. He said Ecobank was big in Ghana, with roughly 1-million clients.

Referring to the Nedbank alliance, Mr Ekpe said the relationship was very important and the objective was to create an African banking champion, a bank that would cover the whole of sub-Saharan Africa.

"It would basically mean if you are a corporate you can have one-stop banking in 40 countries. We just need to strengthen the alliance more, which is what we are doing. We need some geographical alignment. We need to ensure there's not much overlap. The only two countries where we overlap is Malawi and Zimbabwe."

Asked how the alignment would work in those two countries, he said: "In practice they (Nedbank) would either sell to us and we would run the operations or vice-versa. The details ... have not been agreed yet. Before any alignment we need to agree and make sure we comply with regulatory requirements."

Mr Ekpe said Ecobank and Nedbank had done many deals together in Africa since the partnership was conceived in 2008.

Source: Business Day