Kenya's Co-op Bank to take over Jamii Bora
Wednesday March 11 2020
The Co-operative Bank of Kenya plans to buy the entire business of Jamii Bora Bank, making it the latest tier one bank to acquire smaller lenders that are struggling. PHOTO | FILE | NATION MEDIA GROUP
The Co-operative Bank of Kenya has opened discussions with the struggling Jamii Bora Bank (JBB) to acquire 100 percent stake in the small-sized lender.
This makes Co-op Bank the latest tier one bank to acquire smaller lenders that are struggling.
The Central Bank is Kenya (CBK), which is the banking sector regulator, welcomed the move, saying it will enhance the stability of the Kenyan banking sector.
“CBK welcomes the transaction which will diversify the business models of the two institutions and enhance the stability of the Kenyan banking sector,” the regulator said in a statement on Wednesday.
The proposed acquisition is still subject to regulatory approvals and decision of shareholders of both banks.
MARKET SHARE
Co-op started its operations in 1965 and is majority (65 percent) owned by the Kenyan co-operative movement.
Co-op Bank said the acquisition will strengthen both institutions by leveraging on their respective domestic and regional corporate public sector.
The bank, which listed on the NSE in 2008, has a market share of 9.63 percent with 159 branches in Kenya and South Sudan. It was ranked fourth out of 39 banks in terms of market share as at December 31, 2019.
The top tier lender has an asset base of more than Ksh450 billion ($4.5 billion).
Jamii Bora, which has 17 branches in Kenya, was established in 2010 after micro-finance institution Jamii Bora Kenya Limited was acquired by City Finance Bank Limited.
It has an asset base of Ksh12.5 billion ($125 million), and a market share 0.12 per cent stake in the banking business.
Co-op’s stock on the Nairobi Securities Exchange (NSE) fell 0.35 percent to Ksh14.10 ($0.141) per share on Tuesday (March 10) from the previous day’s Ksh14.15($0.142) per share.
Jamii Bora was ranked 38 out of 39 banks in terms of market share as at December 31, 2019.
ACQUISITIONS
CBK said it will provide further updates on the acquisition as the transaction progresses.
This becomes the latest acquisition in the banking sector that has seen consolidation take shape.
Other such deals have been between KCB Bank and National Bank. CBA also came together with NIC Bank to form the NCBA.