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CBA and NIC merger is set for end of year

BUSINESS
By Otiato Guguyu | Feb 1st 2019 | 2 min read
By Otiato Guguyu | February 1st 2019
BUSINESS
Isaac Awuondo (eft) Group Managing Director CBA with John Gachora (right) Group Managing Director NIC Bank speaking during a merger between NIC and CBA banks. [Wilberforce Okwiri/Standard]

The proposed merger of Commercial Bank of Africa (CBA) and NIC Bank is expected to be finalised by the end of this year.

The banking conglomerate arising from the merger of the two lenders associated with the Kenyatta and Ndegwa families, the management said yesterday, was expected to give it increased financial muscle to participate in mega State projects. NIC Managing Director John Gachora said the merger would give the two banks a big balance sheet to leverage national development.

“Balance sheet matters in participating in national development projects which require huge funding for the Big Four agenda,” said Mr Gachora at a joint press briefing with CBA in Nairobi yesterday.

He said NIC hoped to get shareholder approval in the first quarter of this year and regulatory approval in the second quarter, with the merger subsequently being wrapped up in the third quarter.

Once finalised, the merger will create the third largest bank in the country, with an asset base of Sh444 billion. The banks first announced their intention to merge in early December.

The combined entity will carry nine per cent of the sector loans and 9.6 per cent of deposits. The share swap will see the Kenyatta family take a bigger stake in the holding company because of its current size.

“After such share exchange, the 34 shareholders of CBA will in aggregate own 53 per cent stake of the issued shares in NIC Group whilst existing NIC Group will own 47 per cent stake of the issued shares in NIC Group,” said NIC in a cautionary note to investors.

The bank will have over 100 branches serving 40 million customers and has an optimal level of staff at 2,300, almost half of those employed by its close competitor, Equity Bank.

CBA Group Managing Director Isaac Awuondo said the bank would not fire employees but would retain them in alternate roles. “So we will retain the workforce, only the roles may change.”

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