Co-op Bank Managing Director Gideon Muriuki says they are waiting for regulatory approval. [File, Standard]
Cooperative Bank of Kenya has inched closer to acquiring Jamii Bora in a
deal that will see it take a 90 per cent stake in the tier-three
lender.
This is after Jamii Bora Bank’s shareholders approved the acquisition in
an extra-ordinary meeting, paving way for yet another consolidation in
the banking sector.
Co-op Bank, majority-owned by the Kenya Cooperative movement that has
over 15 million members, now awaits relevant regulatory approval to
complete the takeover.
“Co-op Bank has been pleased to note that the shareholders of Jamii Bora
Bank, have pursuant to an Extra-Ordinary General Meeting held on July
1, 2020, unanimously approved our offer to acquire 90 per cent of the
bank,” said Coop Bank Managing Director Gideon Muriuki in a statement.
“This will be through the subscription of 224.2 million new class of
Ordinary Shares that would enable Co-op Bank to inject Sh1 billion and
appoint a board to run the business.”
Jamii Bora Bank acting CEO Timothy Kabiru said the investment by Co-op
Bank will address various challenges and place the bank back on a growth
path. “The investment will restore much-needed confidence from existing
and potential customers, as Co-operative Bank is a solid banking
institution with a proven track record,” said Kabiru.
Regulatory approvals that stand in the way of the latest consolidation
in Kenya’s banking sector include that of Central Bank of Kenya (CBK),
Competition Authority of Kenya and Capital Markets Authority.
The process of acquiring Jamii Bora started on March 11 after Co-op
Bank’s board gave it the nod to open up the discussion that would lead
to the full acquisition of Jamii Bora Bank.
If completed, it will be the 12th successful acquisition in the country’s financial sector.
The acquisition of National Bank by KCB Group is the latest in a wave of
artificial consolidation. In 2017, there were three bank acquisitions,
starting with I&M snapping up Giro Commercial Bank. It was followed
by the takeover of Fidelity Commercial Bank by SBM Bank. In August,
Diamond Trust Bank acquired Habib Bank.
There have also been mergers with the latest being between Commercial Bank of Africa and NIC Bank to form NCBA Bank.
The acquisition of Jamii Bora, if successful, will push Co-op Bank’s
total assets to Sh462.2 billion. CBK ranked Co-op Bank at position four
out of 39 banks in terms of market share as of December 31, 2019. It had
a market share of 9.63 per cent, behind KCB Group, Equity Bank and NCBA
Bank.
NCBA leapfrogged Co-op Bank to become the third-largest lender in asset-size with holdings of Sh487.8 billion.
Mr Muriuki said Co-op Bank’s entry as a strategic partner will help safeguard Jamii Bora shareholders.
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