Nigerian commercial bank, Access Bank, last year announced that it had reached an agreement with Bidvest Group to acquire a 100% stake in Bidvest Bank. At the end of 2024, an agreement was finally reached and the sale of the entity is now official.
In July 2024, the group announced that it had begun the process of disposing of Bidvest Bank and FinGlobal. The announcement came after the group had released its final results and stated that it would dispose of Bidvest Bank “following a portfolio review”.
What is Access Bank?
Access Bank is a wholly owned subsidiary of Access Holdings. The bank has more than 700 branches and services in three continents, 24 markets and 60 million customers. The bank has subsidiaries in Sub-Saharan Africa, the UK, a branch in Dubai, the UAE and representative offices in China, Lebanon and India.
As of 31 March 2022, Access Bank had total assets of approximately $28,8 billion.
What is Bidvest Bank?
Bidvest Bank is a niche bank that specialises in foreign exchange services for individuals, businesses and corporations. The bank was established in 2000 after banking licences were issued by the South African Reserve Bank. Back then the bank was called Rennies Bank and rebranded to Bidvest Bank in 2007.
Currently, the bank has over 140 retail banking outlets in South Africa.
The acquisition of this bank by Access Bank will be closed off in the half of 2025 and is subject to regulatory approval. According to Access Bank, once the acquisition is finished, Bidvest Bank will be merged with Access Bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
“This acquisition supports our ambition to expand across Africa and solidify our presence in key markets, with South Africa being a top priority. Bidvest Bank provides a unique opportunity to blend its local expertise with Access Bank’s trade and retail banking capabilities, creating a platform for long-term growth,” said Roosevelt Ogbonna, CEO of Access Bank.
South Africa’s Banking Sector
In Africa, South Africa’s banking sector is the largest on the continent. Currently, the sector has more than 30 registered banks in South Africa and has reached over $42,2 billion in 2022. One of the Big Four, Standard Bank, is leading in terms of profit. The bank generated $2,32 billion in profits, followed by Nedbank with $1,58 billion and FirstRand with $908 million respectively.
The industry achieved headline earnings growth of 2,5% year-on-year and maintained strong profitability (Return on Earnings of 17%) despite challenging operating conditions. Some of the challenges faced by the sector include:
- Economic volatility.
- Increased levels of non-performing loans.
- Regulatory compliance requirements.
Conditions of the Sale
Before the sale is complete, there are regulatory approvals needed. Although the agreement has been reached to sell the entity for R 2,8 billion, the sale of such a business is an extensive process. The following are the regulations which guide the sale of Bidvest Bank.
South African Bank Act
The Bank Act (previously known as the Deposit-taking Institutions Act) intends to provide the regulation and supervision of the business of public companies taking deposits from the public and to provide for matters connected therewith.
Companies Act
The Companies Act intends to specify the relationship between all parties involved in a company. This includes shareholders, members and directors as stakeholders. Furthermore, the Act assists with legal rectification for investors and third parties and rescuing companies experiencing financial difficulties.
Competition Act
The Competition Act intends to promote and maintain competition in South Africa and for the establishment of the Competition Commission. It also aims to achieve objectives such as promoting efficiency, adaptability and development of the economy. Lastly, the Act works to provide consumers with competitive prices and product choices.
Financial Sector Regulation Act
The Financial Sector Regulation Act is responsible for the establishment of the Ombud council. The Act also aims to enhance and support the efficiency and integrity of financial markets. Also, the Act intends to protect financial customers by promoting their fair treatment by financial institutions and providing customers with financial education.
Beyond these regulations, the sale is also dependent on the authorisation from Nigeria’s Central Bank. According to Access Bank, once the sale passes regulatory approval, the bank will use its new acquisition to “strengthen its business and SME banking, foreign exchange services, and alliance banking capabilities while launching new services tailored to the South African market.”
Bidvest Group Chief Executive Mpumi Madisa said “As a well-respected, experienced, and prominent financial services entity, I am pleased that Access Bank meets our objectives and provides reassurance for the continued sustainability and prosperity of the bank. It will enable the bank to advance, scale, and sustainably grow in today’s fast-changing, technology-driven, and highly competitive sector.” She also highlighted that the Bidvest Group will honour their responsibility and ensure that the business remains financially sound and operationally stable during the transition period. Additionally, the Group will also keep the relevant regulators and stakeholders informed throughout the process.
For more information on how to build a business to sell it, read this fresh article. You are also welcome to speak to an expert for guidance on this matter.
