African bank announced that it is the successful bidder to acquire the majority of Ubank’s disclosed assets and liabilities. It will also take Ubank’s employees on a going concern basis. The will pay R80 million for the deal. But it won’t be acquiring the Ubank legal entity and any residual assets and liabilities that will remain with it.
“This is quite common to do when you have a situation like this, a company that is under curatorship and is no longer under its management and shareholders who would know more in terms of disclosures to the potential buyer,” said African Bank CEO, Kennedy Bungane.
He said the curator approached African Bank towards the end of May. While it was unlikely that there were any liabilities not disclosed, African Bank wanted to make sure that should something come up in the future, they’d be the problem of the legal entity, not African Bank’s.
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.
“To a buyer like ourselves, who doesn’t have to pay up billions of rands to capitalise that business, can simply take it to a much larger balance sheet and solve the capitalisation problem,” said Bungane. “We think we can sort out the operating issues within a short period of time,” he added.
