Nedbank shares fell by more than 4% on Tuesday after a South African newspaper reported that Nigeria’s financial regulator had launched a probe into its West African associate Ecobank.
Nedbank, which is one of South Africa’s four largest lenders, holds a 21% stake in Ecobank and its relationship with the Togo-based lender was just starting to pay-off after years of disappointment.
Lagos-listed Ecobank was not immediately available for comment on Tuesday, while a spokeswoman for Nedbank said she did not think that the Ecobank report was moving its shares.
The Sunday Times reported that The Financial Reporting Council of Nigeria had confirmed an investigation into Ecobank, which returned to profit in 2017 after losing $131.3 million before tax the year before.
“I think it’s going to be a theme going forward. Nigeria’s a tough market to do business in, you are always clashing with the authorities,” Greg Davies, equities trader at South Africa’s Cratos Capital told Reuters.
Ecobank’s Nigerian business had been under pressure due to a slide in commodity prices and currency swings, but it has helped boost Nedbank’s performance in 2018 so far.
Also on Tuesday, Nedbank repurchased R7.1 million shares from minority shareholders, worth 1.41% of its issued share capital, for R1.95 billion ($136 million).
Nedbank shares had fallen 4.10 % to R254 at 0844GMT, while Nigeria’s stock market had not yet opened.
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