Commercial Bank of Africa (CBA), Kenya’s biggest privately owned bank, will merge with NIC Group to create the third biggest bank in the East African region.
The Chairman of NIC, James Ndegwa said “today we announce our intention to merge NIC Group and CBA Group”. NIC CEO John Gachora revealed that NIC aims to get shareholder approval in the first quarter of 2019, regulator approval in the second quarter, and formally merge in the third quarter of the year.
To become the region’s third largest after KCB and Equity, the merged bank will have an asset base of 444 billion Kenyan shillings ($4.41 billion).
Gachora said the transaction will take place though a share swap between the two banks, with current NIC Group shareholders owning 47 percent of the merged entity and CBA shareholders owning 53 percent of the merged entity. He noted that NIC Group will remain listed.
NIC is a leading bank in asset financing and has a strong base of mid-sized corporate clients. CBA has a strong retail client base, including digital-only customers on its M-Shwari mobile platform. In December 2018, the two banks said they would hold talks on a potential merger to combine their expertise in retail and corporate banking.
The merger is the first major deal announced in the industry since the government capped commercial lending rates in 2016. Citing that the merger would help strengthen the financial sector, Finance Minister Henry Rotich said merger talks between the two banks were welcome.