The Central Bank of Kenya (CBK) has approved the merger of Commercial Bank of Africa (CBA) and NIC Group PLC effective September 30, 2019.
This follows CBK’s approval on August 27, 2019, under Section 13(4) of the Banking Act, and approval by the Cabinet Secretary, National Treasury on September 20, 2019, for the merger under Section 9 of the Banking Act.
“Following the merger, effective October 1, 2019, all subsidiaries will operate under a Non-Operating Holding Company, NCBA Group PLC.” Reads a statement in part.
According to CBK, the merged entities will “operate as NCBA Bank Kenya PLC. All account holders, depositors, employees, creditors and other stakeholders of the existing institutions should deal with NCBA Bank Kenya PLC and NCBA Group PLC.”
In March 2019, the Competition Authority of Kenya (CAK) approved the then proposed merger between CBA and NIC Group Plc.
In arriving at the decision, the competition watchdog had expected the resultant merged entity, with a market share of 10.67 percent, to still face competition from tier I banks who, together, control 55.32 percent of the 42-bank market.
“Based on the foregoing, the Authority’s view is that the proposed transaction is unlikely to lead to lessening of competition in the relevant product market for retail and corporate banking services in Kenya,” said CAK.
The same is expected of the bancassurance business where both parties are active as short-term insurance sales agents for various underwriters on a non-exclusive basis.
CBA has been operational for over 50 years and is wholly owned by a group of institutional and ndividual investors with extensive business interests in Kenya and East Africa. It has invested in both banking and non-banking subsidiaries in Kenya, Rwanda, Tanzania and Uganda. As at June 30, 2019, CBA had a arket share of 5.6 percent.
NIC was established in 1959 as an asset finance company and obtained a commercial banking license from CBK in 1995. It merged with African Mercantile Bank Limited in 1997. It has a presence in Kenya, Tanzania and Uganda. As at June 30, 2019, NIC had a market share of 4.3 percent.
The merger will strengthen both institutions leveraging on their combined market share of 9.9 percent and customer base of over 40 million in four East African countries.
