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Ecobank bets on Nedbank taking 20% stake

Lagos - Pan-African lender Ecobank expects South Africa's Nedbank [JSE:NED] to convert a $285m loan to shares in Ecobank before the end of the year, Ecobank's CEO said this week.

Albert Essien said he was confident Nedbank would exercise the conversion option and also top up the conversion amount with $206m to give it a 20% stake in Ecobank.

After the Nedbank deal Ecobank expects its capital adequacy ratio to hit 18.7% of assets by year-end, up from 17.5% in the first six months of the year, Essien said.

"The Nedbank stake is capped at 20%. If they do convert, I think that will strengthen the business relationship that we have (had) since 2008," Essien told an analysts conference call on its half-year results.

"The conversion will trigger reciprocal board seats. We see it as very positive and we expect that it will happen."

Nedbank's CEO, Mike Brown, told Reuters two weeks ago that the bank had until November to decide if it will take the 20% stake in the Togo-based bank, under a strategic alliance it has with Ecobank.

Essien also said he expected another institution EIB to convert about $58m of debt into shares.

Last month Ecobank, which has a presence in 36 African countries, reported 27% rise in its first-half pre-tax profit to 41.67bn naira.

Chief Financial Officer Laurence do Rego said on the conference call that the lender was aiming for a 15% growth in lending in 2014, after it achieved 8% in the first half, of which Nigeria accounted for 40% of total loans.

Essien said Ecobank had recently set up operations in Mozambique and secured a banking licence in Angola.

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