Kenyan based rival banks National Industrial Credit Bank, also known as NIC and the Commercial Bank of Africa (CBA) have commenced talks for a merger.
In a joint statement released on Thursday by chairmen for both companies, they announced talks for the merger have kicked off and that are in high gear.
“NIC Group PLC and Commercial Bank of Africa Limited announce that their Boards of Directors have authorized the commencement of discussions regarding a potential merger of the two entities,” said the statement.
Upon conclusion of these discussions and subject to approvals from shareholders of the two entities and regulatory authorities, it is expected that the merger will create one of the largest financial services group in the region. It is the view of the two Boards that a 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.”
According to the statement, a combined entity would help create a complimentary base of 38 million customers which would in turn be a “strong digital proposition” and robust corporate and set finance offering and would help them position themselves in Kenya and region at large.
“The Boards believe that the combined 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.”
KCB, at 14.14% is the biggest bank in Kenya above Cooperative, Standard Chartered, Equity, Diamond Trust and Barclays but the merger would see CBA become the second biggest bank in East Africa’s biggest economy.
CBA is the seventh bank controlling 6.05% whereas NIC controls 4.62% and on merging, they will control 10.67%.
In their statement, the two banks said the merger would provide new and greater opportunities for employee development, advancement and growth.
“The combined group would be better placed to play a bigger and more significant role in the banking sector and the economies of Kenya, the region and beyond. It is important to note that an eventual merger remains subject to due diligence processes, shareholders’, regulatory and other approvals.”
However, according to the statement, the two banks will continue operating independently as the negotiations go on.