Competition Authority Approves CBA-NIC Merger

The long-awaited merger between Commercial Bank of Africa (CBA) and NIC Group Plc has finally been approved by the Competition Authority of Kenya (CAK).

The decision comes after the two banks confirmed their merger plans in January this year in a bid to create a bank with the financial strength, expertise, and regional reach to support Kenya’s and the regions’ economic growth aspirations.

The CBA-NIC merger has however been approved on the condition that the two entities should retain all their employees for at least one year.

The CAK has said that it expects the merged entity to still face competition from tier 1 banks who control over half of the bank market which comprises of 42 banks.

“Based on the foregoing, the Authority’s view is that the proposed transaction is unlikely to lead to a lessening of competition in the relevant product market for retail and corporate banking services in Kenya,” said CAK.

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According to financials released in December 2018, the combined net profit of CBA and NIC stood at 9.23 billion shillings.

CBA’s profit after tax fell by 9.7 percent from 5.54 billion shillings to 5 billion shillings while NIC’s after-tax profit grew by 2 percent to 4.23 billion shillings during this period.

The CBA-NIC merger will see current NIC group shareholders owning 47 percent of the merged entity and CBA shareholders owning 53 percent of the merged entity.

Shareholders of CBA, with 98.15 percent stake of the issued and fully paid up share capital have already accepted the deal.

The combined bank will be amongst the largest financial institutions in the East Africa region with a total asset base in excess of 444 Billion shillings and Shareholders’ Equity of 65 Billion shillings.

It will be the second largest bank in Kenya by customer deposits and third largest by total assets and a true market leader in Corporate Banking, Asset Finance, and Digital Banking.

The deal is expected to be fully finalized in the second quarter of 2019.

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