By James Anyanzwa
City Finance Bank (CFB) has officially acquired Jamii Bora Kenya Ltd, the country’s fastest growing microfinance institution.
In a Gazette Notice No.2441 dated March 3, Central Bank of Kenya governor Njuguna Ndung’u said the acquisition deal was concluded last month after it received an approval from the Treasury.
The deal comes after the shareholders of the two institutions separately agreed to a share-swap arrangement.
The acquisition is meant to change the bank’s business model by shifting focus from middle-sized and high net-worth customers to small savers.
"The Deputy Prime Minister and Minister for Finance Uhuru Kenyatta has approved the sale, purchase and transfer of the assets and assumptions of the liabilities of Jamii Bora Kenya (JBK) Ltd by City Finance Bank Ltd whereupon such sale purchase transfer took effect on the February 11," said Prof Ndung’u.
The latest acquisition in the industry comes after a consortium of local investors — Baraka Africa Fund (BAF), and other individual investors — acquired a 51 per cent interest in CFB, with intentions of restructuring the institution through injection of fresh capital, appointing competent and professional management and re-branding.
The 14-year-old bank was looking for strategic investors to sharpen its competitive edge in the market, and shore up its capital base severely eroded by years of loss making.
It is understood that under the new arrangements, the bank will take over JBK assets and liabilities including its current members, who will be promoted to bank depositors.
CFB, which has been on a loss-making streak since 2000, is expected to use the microfinance institution to turnaround and register positive returns to shareholders.
The JBK was established in 1999 at the initiative of 50 street families in Nairobi, and registered as a charitable Trust in November 22, 1999.