The acquisition of Jamii Bora Bank by Co-operative Bank is set to take effect this month following the gazettement by Central Bank of Kenya (CBK).
The deal was approved by CBK on August 3 and further received the approval of the National Treasury Cabinet Secretary on August 4, according to the gazette notice published yesterday.
Co-op Bank will acquire a 90 per cent shareholding in its smaller rival which has 17 branches across the country and assets estimated at around Sh12 billion.
“CBK welcomes this transaction which will diversify the business models of the two institutions, benefitting Co-op Bank’s diverse shareholders and enhancing the resilience of the Kenyan banking sector,” read a statement from the CBK.
Jamii Bora Bank was established in 2010 after the acquisition by City Finance Bank of the business of Jamii Bora Kenya and is ranked 38 out of 39 banks with market share of 0.09 per cent.
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Co-op Bank, started in 1965, is owned predominantly by the 15 million-member co-operative movement. It was ranked third out of 39 banks in terms of market share as at June 30, 2020, with 9.96 per cent market share and 159 branches in Kenya and South Sudan.
Co-op Bank has an asset base of Sh470 billion.
The acquisition of Jamii Bora, an SME-focused lender, comes at a time when financial institutions are opting for mergers and acquisitions amid a tough operating environment.
“So far, the measures taken by CBK in the recent past to strengthen the banking sector, including review of business models and consolidation, have been beneficial in enabling the sector ride through the pandemic period while supporting their customers and the economy,” CBK said.