Cooperative Bank of Kenya has inched closer to acquiring Jamii Bora in a deal that will see it take a 90 per cent stake in the tier-three lender.
This is after Jamii Bora Bank’s shareholders approved the acquisition in an extra-ordinary meeting, paving way for yet another consolidation in the banking sector.
Co-op Bank, majority-owned by the Kenya Cooperative movement that has over 15 million members, now awaits relevant regulatory approval to complete the takeover.
“Co-op Bank has been pleased to note that the shareholders of Jamii Bora Bank, have pursuant to an Extra-Ordinary General Meeting held on July 1, 2020, unanimously approved our offer to acquire 90 per cent of the bank,” said Coop Bank Managing Director Gideon Muriuki in a statement.
“This will be through the subscription of 224.2 million new class of Ordinary Shares that would enable Co-op Bank to inject Sh1 billion and appoint a board to run the business.”
Jamii Bora Bank acting CEO Timothy Kabiru said the investment by Co-op Bank will address various challenges and place the bank back on a growth path. “The investment will restore much-needed confidence from existing and potential customers, as Co-operative Bank is a solid banking institution with a proven track record,” said Kabiru.
Regulatory approvals that stand in the way of the latest consolidation in Kenya’s banking sector include that of Central Bank of Kenya (CBK), Competition Authority of Kenya and Capital Markets Authority.
The process of acquiring Jamii Bora started on March 11 after Co-op Bank’s board gave it the nod to open up the discussion that would lead to the full acquisition of Jamii Bora Bank.
If completed, it will be the 12th successful acquisition in the country’s financial sector.
The acquisition of National Bank by KCB Group is the latest in a wave of artificial consolidation. In 2017, there were three bank acquisitions, starting with I&M snapping up Giro Commercial Bank. It was followed by the takeover of Fidelity Commercial Bank by SBM Bank. In August, Diamond Trust Bank acquired Habib Bank.
There have also been mergers with the latest being between Commercial Bank of Africa and NIC Bank to form NCBA Bank.
The acquisition of Jamii Bora, if successful, will push Co-op Bank’s total assets to Sh462.2 billion. CBK ranked Co-op Bank at position four out of 39 banks in terms of market share as of December 31, 2019. It had a market share of 9.63 per cent, behind KCB Group, Equity Bank and NCBA Bank.
NCBA leapfrogged Co-op Bank to become the third-largest lender in asset-size with holdings of Sh487.8 billion.
Mr Muriuki said Co-op Bank’s entry as a strategic partner will help safeguard Jamii Bora shareholders.