Windhoek - Namibia's central bank said on Friday it declined a bid by Absa Group [JSE:ASA] to buy a controlling stake in financial firm Capricorn Investment Holdings.

Absa, majority-owned by Britain's Barclays, said in February it planned to buy a controlling stake in Capricorn for an undisclosed amount.

Capricorn controls Bank Windhoek, Namibia's largest bank.

The bid was denied due to concern Namibia's financial sector would become controlled by South African banks, which already have stakes in most other local lenders, central bank governor Ipumbu Shiimi told reporters.

"The Bank of Namibia is concerned that should the transaction be approved all domestic banks will be majority foreign owned, which is not in line with the national development objectives," he said.

"Secondly, this could further expose the Namibian banking industry to a single-country risk, a situation that is not desirable." Bank Windhoek has more than R13bn in assets.

South African banks are increasingly looking to expand into fast-growing frontier African markets due to stiff competition and a more mature market at home.

Absa CEO Maria Ramos told Reuters last week the banks was "constantly on the lookout" for an acquisition in oil-rich Nigeria, Africa's most populous nation.

On Friday Absa shares were up 1.2% at R122.90 as of 14:49 GMT, roughly in line with Johannesburg's Top-40 index .JTOPI, which was up 1.4%.

- Reuters