Talks have commenced between Kenya’s largest privately owned commercial bank CBA and Nairobi Securities Exchange (NSE)-listed mid-sized lender NIC Bank, to merge the two entities. A successful merger will lead to the creation of one of the largest financial services groups in East Africa, with assets in excess of Sh400 billion, according to latest disclosures.
A joint statement by the two banks said that the Board of Directors of the two lenders believe “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”.
“A combined entity would create a complementary base of over 38 million customers, a strong digital proposition and a robust corporate and asset financing offering.”
The Boards believe that combining the business of two profitable entities will enhance capacity through capital consolidation and strong liquidity, all which will capture growth opportunities and help the combined entity to play a more significant role in the banking sector, the Kenyan economy and in extension, the region.
Treasury Cabinet Secretary Henry Rotich is happy with the proposed merger. He note that the stronger bank former from the merger would provide more credit in Kenya and take on formidable rivals from West Africa such as Nigeria’s Guaranty Trust Bank and the United Bank for Africa which are looking to continue their growth and expansion in East Africa.
It is unclear whether the new bank formed from the merger will be listed on the NSE like NIC Bank or held privately like the Commercial Bank of Africa (CBA), where the Kenyatta family hold a controlling stake.
NIC Bank ended Friday on a high on the NSE following news of the proposed merger, with its shares rising 32.45 percent to close at Sh30.
The proposed merger is subject to approval by regulators and shareholders.