Diamond Trust Bank Ltd acquires 100 percent stake in Habib Bank Ltd
David Indeje
The Diamond Trust Bank Kenya Limited (DTB) has now become the sole owner of Habib Bank Limited Kenya (HBLK), following Central Bank of Kenya’s approval.
DTB which had acquired the Business, Assets and Liabilities of HBLK as provided under Section 9 of the Banking Act in July 2017 approval granted by the National Treasury. This acquisition follows CBK’s approval on June 21, 2017, for HBL to acquire an additional 4.18 percent shareholding in DTB under section 13 (4) of the Banking Act, as a consideration for the acquisition said in a statement.
“Consequently, effective August 1, 2017, HBLK will cease to be a bank licensed by CBK, and its rights and obligations will be taken up by DTB. All HBLK stakeholders including depositors, borrowers, employees, and creditors will therefore continue their relationships with DTB.”
According to Cytonn InvestmentsQ1’2017 Banking Sector Report, key value drivers for DTB are a strong backing from financing partners, like Aga Khan Fund for Economic Development and Habib bank (now acquired) and its best asset quality in the sector, with gross NPL ratio at 4.3 percent compared to an industry average of 11.1 percent.
DTB was licensed in 1997, and was ranked 6th in terms of market share as at May 31, 2017, with 63 branches. HBLK was licensed in 1956, and was ranked 33rd in terms of market share as at May 31, 2017, with 5 branches. Taken together, they had a combined market share of about 6 percent as at May 31, 2017. DTB has a banking presence in Kenya, Uganda, Burundi and Tanzania, and is listed at the Nairobi Securities Exchange.
The Kenya banking sector continues to witness Increased consolidation in the industry, mainly through acquisitions. “Consolidation in the banking sector will only gather pace as stable banks target to acquire small, weaker banks. This will lead to fewer and stronger banks, hence a more stable banking sector,” says Cytonn.
