The Kenyatta and Ndegwa families are set to form the third largest bank in Kenya. The bank, which will be the result of a merger between NIC Bank and Commercial Bank of Africa (CBA), will be bigger than the Co-operative Bank by assets.
It will now be ranked third after KCB and Equity Bank. Currently, KCB leads the banking pack by assets and profitability, with Equity Bank and Co-op Bank coming a close second and third. Their formation will follow a merger between the two banks. Currently, merger talks are in progress, with the banks stating that the merger process will be concluded soon. According to a statement sent to Bizna Kenya, the two lenders are currently working towards the successful conclusion of discussions on the merger and obtaining relevant approvals from shareholders of the two entities and regulatory authorities.
“The boards believe that combining the business of two highly profitable entities would create enhanced capacity through capital consolidation and strong liquidity to capture strategic growth opportunities,” the lenders say in a joint statement.
CBA is currently the seventh biggest bank in the country controlling a 6.05 per cent market share, according to the latest banking sector supervisory report. NIC on its part controls 4.62 per cent.
Combined, the two will have a market share of 10.67 per cent, which places the planned new entity above Cooperative Bank (9.93 per cent) and Below KCB Bank (14.14 per cent). “A combined entity would create a complementary base of over 38 million customers, a strong digital proposition and a robust corporate and asset finance offering,” the joint statement stated.
The Kenyatta and Ndegwa families have controlling stakes in these banks and their merger is expected to mark another milestone for two of Kenya’s leading political families.
“It is the view of the two boards that the potential merger would bring together the best in class retail and corporate banks with strong potential for growth in all aspects of banking and wealth management,” they lenders said in the statement. “A combined entity would create a complementary base of over 38 million customers, a strong digital proposition and a robust corporate and asset finance offering.”
The two lenders further say that a successful merger would allow them to “invest in future growth and in new technology to create enhanced offerings and wider services to its customers, as well as deliver deeper financial inclusion while generating attractive returns to shareholders. A combined larger group would provide new and greater opportunities for employee development, advancement and growth,” they said in the statement. “The combined group would be strongly placed to play a bigger and more significant role in the banking sector and the economies of Kenya, the region and beyond.”
Expectedly, NIC Bank has also issued a cautionary trading statement following the announcement. “This transaction, if successfully concluded, may have a material effect on the price of the company’s securities. Accordingly, shareholders, bondholders and the investing public are advised to exercise caution when dealing in the company’s securities,” said NIC.