The Kenyan banking sector is set to receive a shakeup by getting the entrance of the third-largest lender by assets if the merger between the Commercial Bank of Africa and NIC Bank will materialize.
In a joint statement to the newsrooms, Commercial Bank of Africa (CBA Group) and NIC Bank said that they had opened up talks for a possible merger, one that will be the largest merger in the Kenyan banking in 10 years.
Currently, the third largest bank by assets is the Co-operative Bank of Kenya but if the NIC and CBA come together, the total assets will be at least 444.3 billion shillings, automatically pushing Co-op Bank to a fourth position.
Kenya Commercial Bank is the largest bank in Kenya in terms of assets, currently valued at 684.1 billion shillings followed by Equity Bank whose assets are valued at 560.3 billion shillings. Co-operative Bank of Kenya, as at September, had an asset value of 404.1 billion shillings.
According to the statement from both the CBA and NIC, Boards of Directors from both lenders have authorized the commencement of discussions regarding a potential merger of the two entities.
The lenders say that upon the successful conclusion of these discussions and subject to approvals from shareholders of the two entities and regulatory authorities it is expected that the envisaged merger would create one of the largest financial services groups in the region.
Economic analysts say that the merger between the two lenders will create a shift in Kenya’s banking sector, similar to what was witnessed 10 years ago when KCB and Equity became first and second largest bank after edging out Barclays Bank of Kenya and the Standard Chartered Bank.
“It is the view of the two Boards that the 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. A combined entity would create a complementary base of over 38 million customers, a strong digital proposition and a robust corporate and asset finance offering,” read part of the statement.