Ecobank Transnational Incorporated agreed to offload its stake in its subsidiary in Mozambique to FDH Bank Plc, a lender based in Malawi and listed on the local bourse, the pan-African banking group declared in a statement on Tuesday.
Ecobank, which operates in thirty-five markets in sub-Saharan Africa, is parting with the 96 per cent interest it has held in the entity since 2014, when it acquired it from Mozambique’s Banco ProCredit.
It envisages that the ownership and management change resulting from the deal will not unsettle banking operations, assets and the workforce. The value of the share sale is undisclosed.
The group is under an obligation to provide its Nigerian unit with $50 million to boost its capital adequacy to the regulatory minimum, having issued promissory notes to that effect, S&P Global stated in a ratings commentary in June.
According to the ratings agency, the group is expected to make the cash available to Ecobank Nigeria before the end of this month in exchange for a capital-qualifying instrument of the same value.
Ecobank gained 4.4 per cent at the end of trade in Lagos on Tuesday after the announcement of the divestment went public.
Ecobank Mozambique runs banking services in four branches in the country’s four biggest cities. Its offerings include consumer banking, bancassurance and microfinance, among others.
“This strategic decision aligns with our commitment to Ecobank’s Growth, Transformation, and Returns strategy, ensuring we remain a competitive and meaningful player across the markets in which we operate,” said Jeremy Awori, CEO of the banking corporation.
“As a Pan-African financial institution, we continuously assess our operations to drive sustainable growth while maintaining our core mission of driving Africa’s financial integration and economic growth.”
He added that the lender is considering collaborations with FDH Bank to help Ecobank continue positioning Mozambique as a corridor for cross-border payments through its pan-African digital ecosystem.
In the six months to June, the group’s after-tax profit advanced to N433.9 billion ($278.8 million) from N311 billion ($227.3 million) a year ago. Gross earnings increased by 24 per cent to N2.3 trillion ($1.5 billion) during the period.
