Barclays to buy Nile Bank
Nov 20, 2006
A BARCLAYS Bank bid to buy Nile Bank means the smaller institution’s planned share sale at the end of this year may not happen, sources familiar with the deal said.
By Paul Busharizi
A BARCLAYS Bank bid to buy Nile Bank means the smaller institution’s planned share sale at the end of this year may not happen, sources familiar with the deal said.
A team of Barclays officials have been in the country to do a preliminary assessment of Nile Bank’s business.
“There have been people working on the loan book, a key piece of due diligence that would suggest they are seriously thinking about buying the bank,†the source said.
“They sent in people from Nairobi and Johannesburg, an expensive exercise that they would not do unless they were seriously thinking of doing the deal.â€
Industry sources have confirmed that Barclays is showing interest in Nile.
“I know there has been a team from Barclays looking at their books, a strong sign that they are intersted,†a senior industry official said.
If the acquisition goes through Barclays, will acquire 15 branches to add
to its seven branches – six of which are in Kampala and the recently opened Mbale branch.
Richard Byarugaba, the Nile Bank managing director, declined to comment on the subject but explained the delay in the share sale was due to the much bigger impending sale of Stanbic Bank shares.
“We decided to slow down the IPO (Initial Public Offer) because of the much bigger Stanbic Bank IPO,†he said. “We had everything ready to go but decided to wait until Stanbic was off the market.â€
Market authorities pleaded ignorance to the latest development surrounding the Nile Bank’s IPO.
“As far as I am concerned, we are still waiting for the prospectus. I have no information on the sale,†Capital Markets Authority chief, Japheth Katto said.
“But if it were true, we would be disappointed because we were looking forward to seeing them on market.â€
Barclays Bank’s Nick Mbuvi was not available for comment. As the due diligence is still in its early stages there is no firm sale price as yet.
However, an expert commenting on the subject estimated that a 2.5 times the bank’s sh11.7b net asset value would be a good place to start. Barclays Bank’s net asset value was sh56.1b as of the end of last year and had customer deposits sh255.7b more than three times Nile’s sh77b.
The planned acquisition of Nile Bank signals a shift in strategy for the high street bank which until this year’s opening of the Mbale branch had chosen to concentrate its activities in Kampala. Barclay’s Jinja branch was shut down in the early 1990s.
“I think the acquisition of Barclays business in Africa by (South African Bank) ABSA last year has brought about this change of strategy,†our source said.
“If they want to be a big retail bank they have to target the whole range of clients and not remain elitist by pushing the Barclays prestige model.â€
Last year Barclays Bank acquired South African retail giant ABSA returning to the South African market after about 20 years. As part of deal Barclays would take control of ABSA South African business but ABSA would takeover the rest of their branches on the continent.
The strategy is not isolated to Uganda.
Two weeks ago Barclays’ Kenyan unit announced an ambitious Ksh2b (sh50b) plan to double branches and Automated teller machines (ATM) sites in Kenya.
In recent weeks Barclays Kenyan unit has made inroads back into the rural areas.
Much of the Sh2 billion is going into the 40-plus branches to be set up by 2008. About Sh300 million will fund the ATM rollout, while a further Sh45 million will have a call centre up and running in the first year.
A BARCLAYS Bank bid to buy Nile Bank means the smaller institution’s planned share sale at the end of this year may not happen, sources familiar with the deal said.
A team of Barclays officials have been in the country to do a preliminary assessment of Nile Bank’s business.
“There have been people working on the loan book, a key piece of due diligence that would suggest they are seriously thinking about buying the bank,†the source said.
“They sent in people from Nairobi and Johannesburg, an expensive exercise that they would not do unless they were seriously thinking of doing the deal.â€
Industry sources have confirmed that Barclays is showing interest in Nile.
“I know there has been a team from Barclays looking at their books, a strong sign that they are intersted,†a senior industry official said.
If the acquisition goes through Barclays, will acquire 15 branches to add
to its seven branches – six of which are in Kampala and the recently opened Mbale branch.
Richard Byarugaba, the Nile Bank managing director, declined to comment on the subject but explained the delay in the share sale was due to the much bigger impending sale of Stanbic Bank shares.
“We decided to slow down the IPO (Initial Public Offer) because of the much bigger Stanbic Bank IPO,†he said. “We had everything ready to go but decided to wait until Stanbic was off the market.â€
Market authorities pleaded ignorance to the latest development surrounding the Nile Bank’s IPO.
“As far as I am concerned, we are still waiting for the prospectus. I have no information on the sale,†Capital Markets Authority chief, Japheth Katto said.
“But if it were true, we would be disappointed because we were looking forward to seeing them on market.â€
Barclays Bank’s Nick Mbuvi was not available for comment. As the due diligence is still in its early stages there is no firm sale price as yet.
However, an expert commenting on the subject estimated that a 2.5 times the bank’s sh11.7b net asset value would be a good place to start. Barclays Bank’s net asset value was sh56.1b as of the end of last year and had customer deposits sh255.7b more than three times Nile’s sh77b.
The planned acquisition of Nile Bank signals a shift in strategy for the high street bank which until this year’s opening of the Mbale branch had chosen to concentrate its activities in Kampala. Barclay’s Jinja branch was shut down in the early 1990s.
“I think the acquisition of Barclays business in Africa by (South African Bank) ABSA last year has brought about this change of strategy,†our source said.
“If they want to be a big retail bank they have to target the whole range of clients and not remain elitist by pushing the Barclays prestige model.â€
Last year Barclays Bank acquired South African retail giant ABSA returning to the South African market after about 20 years. As part of deal Barclays would take control of ABSA South African business but ABSA would takeover the rest of their branches on the continent.
The strategy is not isolated to Uganda.
Two weeks ago Barclays’ Kenyan unit announced an ambitious Ksh2b (sh50b) plan to double branches and Automated teller machines (ATM) sites in Kenya.
In recent weeks Barclays Kenyan unit has made inroads back into the rural areas.
Much of the Sh2 billion is going into the 40-plus branches to be set up by 2008. About Sh300 million will fund the ATM rollout, while a further Sh45 million will have a call centre up and running in the first year.