CBA owners to wait longer for NIC shares

Commercial Bank of Africa Group Managing Director Isaac Awuondo (left) with his NIC Bank counterpart John Gachora when the two lenders announced the merger in Nairobi on January 31. FILE PHOTO | NMG 

In Summary

• The two banks have completed their tie-up but have not met all regulatory requirements that would allow CBA shareholders to get new shares in NIC.
• Most of the regulatory approvals have been received but the listing of the new shares has delayed beyond the initial deadlines of July and September.
• The parties had said the merger timeline was subject to change.

By VICTOR JUMA
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NIC Group is yet to issue new shares to owners of CBA Group as part of their merger.

The two banks have completed their tie-up but have not met all regulatory requirements that would allow CBA shareholders to get new shares in NIC, which trades on the Nairobi Securities Exchange (NSE).

Mr John Gachora, the chief executive of NCBA Group Plc, as the merged entity is now called, told the Business Daily that an announcement on the issue would be made soon.

“There is a small process to go through,” he said.

Most of the regulatory approvals have been received but the listing of the new shares has delayed beyond the initial deadlines of July and September.

The parties had said the merger timeline was subject to change.

The combined entity, in which NIC will take a 47 per cent stake while CBA holds the controlling 53 per cent equity, will become the third-largest bank in the country with assets of Sh476 billion based on June disclosures.

NIC’s issued shares currently stand at 703.9 million and an additional 793.8 million shares are expected to be created and allotted to CBA’s shareholders, raising the total volume of stock in the listed entity to 1.49 billion units.

The deal values each NIC share at about Sh49, significantly above the lender’s current trading price of Sh31 on the NSE.

NCBA will relegate Co-operative Bank, with Sh429.5 billion in assets, to fourth place.

KCB Group and Equity Group rank first and second with assets of Sh746.5 billion and Sh638.6 billion respectively.

The merger is currently valued at Sh72.7 billion — being the book value of the two institutions based on numbers published in the half-year ended June.

The two lenders first announced the merger plans on December 6, 2018, with shareholders approving the new development on last April.

Central Bank of Kenya last week gave its approval to the tie-up, paving the way for the merged entity to start formal operations on Monday.

Mr Gachora said the plan is to spend the next one-month finalising the harmonisation of systems, so that customers can enjoy seamless services by November 1.

The merger will bring together the business interests of two of Kenya’s wealthiest families — the Kenyattas and the Ndegwas — who held controlling stakes in CBA and NIC respectively.