The Co-operative Bank of Kenya (Co-op) plans to buy the entire business of Jamii Bora Bank Limited, making it the latest tier one bank to acquire smaller lenders that are struggling.
The Central Bank of 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 Wednesday.
But the deal is still subject to regulatory approvals.
Co-op Bank started its operations in 1965 and is predominantly owned by the Kenyan co-operative movement.
It was listed at the Nairobi Securities Exchange in 2008.
It was ranked fourth out of 39 banks in terms of market share as at December 31, 2019.
It had a market share of 9.63 per cent and 159 branches in Kenya and South Sudan.
Jamii Bora, on the other hand, was established in 2010 after acquisition by City Finance Bank Limited of the business of Jamii Bora Kenya Limited, a micro-finance institution.
It was ranked 38 out of 39 banks in terms of market share as at December 31, 2019. It has a market share of 0.12 per cent with 17 branches across the country.
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.