Zachary Ochuodho @zachuodho
Commercial Bank of Africa (CBA) and NIC Bank have opened discussions on a potential merger that will create one of the largest financial services institution in the country.
A statement issued last evening and signed by chairmen of the two banks, Destario Oyatsi (CBA) and James Ndegwa (NIC Group PLC), said the merger of the entities 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 finance offering,” the statement read in part.
According to Central Bank Supervision Annual Report for 2017, CBA as at December 2017, had a total assets of Sh229,525 billion with a market share of 5.7 per cent and total deposits of Sh186,444 billion. On the other hand, NIC Group Plc had a total net assets of Sh192,817 billion and 4.8 per cent market and Sh142, 006 billion customer deposits.
Thus, upon successful conclusion of the discussions and subject to approvals from shareholders of the two entities and regulatory authorities, the combined institutions will have the total asset base of Sh422,342 billion, market share of 10.5 per cent and Sh328,450 billion deposit base.
This means the combined banks will create the second largest institution after KCB which has a net asset of Sh555,630 billion.
Co-operative Bank will come in third with a net asset base of Sh406,402 billion. As at December 31, 2017, KCB had a market share of 13.9 per cent while Co-operative Bank 10.2 per cent.
“The Boards of Directors 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. This would allow it 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,” Oyatsi and Ndegwa said in the joint statement.
They said during this phase of discussions, the two entities will continue to operate independently.
NIC, a tier two institution, is a market in asset financing and mid-size corporate banking segment. CBA has a strong retail client base, especially on the M-Shwari mobile platform.
NIC was incorporated in Kenya in 1959 and has 42 branches in Kenya, Tanzania (five), Uganda (three) as well as digital banking solutions.
CBA has operated in Kenya for more than 50 years and has subsidiaries in Kenya, Rwanda, Tanzania, Uganda and Ivory Coast.