NIC-CBA Bank: The National Treasury has exempted the merged CBA and NIC bank from paying share transfer tax. The transfer tax was expected to run into hundreds of millions of shillings.
A report in the Business Daily says that suspended National Treasury Cabinet Secretary Henry Rotich had exempted the transfer of CBA shares into NIC Bank from paying stamp duty of one percent of worth of the unquoted stocks being transferred.
“The transaction is taking place though a share swap between the two banks, with current NIC group shareholders owning 47 percent of the merged entity and CBA shareholders including the Kenyatta family owning 53 percent of the merged entity. NIC Group will remain listed, suggesting a transfer of the CBA unquoted shares, which makes them liable for the one percent stamp duty tax. The deal did not quote the value of CBA shares, but analysts estimate the value of 53 per cent stake at Sh. 35 billion based on the book value of Sh. 65 billion when the deal was announced—putting the stamp duty charge at more than Sh. 350 million,” says the paper.
The combined franchise will boast of 26 million customers in Kenya and 42 million regional customers at group level made up of CBA’S 41 million and NIC’s 1 million customers, making it the largest bank in the region by customer base. The Kenyattas currently hold a 24.92 percent stake in CBA while Phillip Ndegwa family, which founded NIC Bank, has a 25 percent interest in the listed lender. Businessman Naushad Merali will end up with a 2.9 percent equity based on his present direct ownership of a 5.6 percent stake in CBA.
NIC Bank chief executive John Gachora will be the head of the new banking outfit that is set to be formed from the merger of NIC Bank and Commercial Bank of Africa (CBA) bank. According to reports, Mr. Gachora will be in charge of the management of the merged outfit. His CBA counterpart, Isaac Awuondo, will become chairman of the Kenyan banking subsidiary and maintain direct oversight over the digital business.
“The merged group will operate under a new name and brand, which will be determined prior to concluding the merger. The combined entity’s board of directors and executive management team will also be well balanced between the two institutions,” said the two banks in a joint statement. NIC-CBA Bank.