Kenya's CBA Gets 53% of NIC in Biggest Bank Deal in Decade

(Bloomberg) -- Commercial Bank of Africa Ltd. and NIC Group Plc agreed to combine their operations to create Kenya’s third-largest lender in the biggest banking tie-up in at least a decade.

Privately-held CBA will get 53 percent of the merger entity, while NIC Group will hold the balance, NIC’s Chief Executive Officer John Gachora told investors at a briefing in the Kenyan capital, Nairobi. The merged bank will have a combined asset base of 415 billion shillings ($4.11 billion) in Kenya alone and 9 percent of all loans in the nation.

Key Insights

  • The merger will be complete by the third quarter and the new lender will remain listed on the Nairobi Stock Exchange, Gachora said. NIC Group will be the holding company of the merged business.
  • The new lender will have to increase its headcount in three years to scale the business, CBA Managing Director Isaac Awuondo said.
  • A successful merger would be the biggest since Johannesburg-based Standard Bank Group Ltd. in 2007 started talks to buy CFC Bank Ltd.
  • It will also be the first major deal since the regulator started pushing for consolidation in 2015 and could spur Kenya’s other lenders to consider tie-ups. The country has 43 lenders, more per person than South Africa and Nigeria, Africa’s two biggest economies.
  • A unified bank would strengthen its ability to expand regionally -- both lenders already operate in Uganda and Tanzania, and CBA has ambitions to operate in 16 African nations.

Market Reaction

  • The shares jumped 13 percent to 33 shillings as of 10:12 a.m. in Nairobi, extending gains since talks started in early December to 46 percent. A close at this level will be the highest since Aug. 23.

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