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Fidelity Bank's sale for a song gets nod

By Macharia Kamau | Updated Thu, January 5th 2017 at 00:00 GMT +3

Fidelity Bank’s planned sale for a paltry Sh100 to SBM Holdings of Mauritius has received shareholders’ approval.

The two institutions are now expected to sign a share purchase agreement after which the sale will be subject to approval by banking industry regulators in Kenya and Mauritius.

SBM Holdings in November announced it was in the process of acquiring the Kenyan bank.

In a cautionary statement to the Stock Exchange of Mauritius, the firm, which operates SBM Bank, said it would acquire the entire share capital of Fidelity Commercial Bank Limited (FCBL) and inject an additional equity of Sh1.46 billion as growth capital.

In a statement on the progress of the transaction yesterday, the Central Bank of Kenya (CBK) said it had received an update on the development from Fidelity Bank, saying its shareholders had approved the sale last month.

“FCBL held a board meeting on December 21, 2016 and then an Extraordinary General Meeting of shareholders on December 28, 2016 where the transaction was discussed and approved,” said the CBK in a statement.

“In light of the progress thus far, it is expected that a Share Purchase Agreement (SPA) will be signed in the near future, which would allow requests of the remaining regulatory approvals to be made. Subject to these approvals, the transaction will then be completed.”

Fidelity Bank has been in operation since 1992 when it started out as a non-bank financial institution and in 1996 converted to a commercial bank.

According to CBK, the bank ranked number 31 out 41 commercial banks in terms of market share as at December 2015, with a market share of 0.39 per cent.

The bank currently has 14 branches in Nairobi, Eldoret, Diani, Malindi and Mombasa.

It recently announced plans to increase its footprint across East Africa by 2018.

SBM Group is the second largest company listed on the Stock Exchange of Mauritius.

As at September 30, 2016, it had an asset base of about $4.2 billion (Sh417 billion).

SBM Group’s banking arm, SBM Bank (Mauritius), is one of the leading banks in the county, with an international footprint in India, Madagascar and a representative office in Myanmar.