NCBA buyout of Jamii Bora doubtful after Kenyattas, Ndegwas merger deal

The acquisition of struggling Jamii Bora Bank now hangs in the balance after its suitor Commercial Bank of Africa (CBA) merged with NIC.

The merger, which brought together the banks owned by the Kenyatta family and former CBK governor Philip Ndegwa’s family, has seemingly derailed interest in Jamii Bora.

CBA had opened buyout talks with Jamii Bora Bank at the same time it was in discussions with NIC Bank over the merger that was completed last October creating NCBA #ticker:NCBA.

NCBA chief executive John Gachora told the Business Daily said that discussions over the Jamii Bora deal have not emerged post-merger, which has seen the entities go overdrive on integration of NIC and CBA.

“That was a pre-merger conversation with CBA, but at this point I call it a good rumour as far as I know. It has not come up post-merger,” said Mr Gachora.

CBA had in January 2018 made a Sh1.4 billion cash offer to buy out Jamii Bora Bank and hold it privately in addition to having a stake in the merged operations of CBA and NIC.

Its microcredit business, M-Shwari, was to be spun off to Jamii Bora while NCBA was to focus on corporate and SME banking.

Jamii Bora, which is facing liquidity challenges, was hoping the merger would make it compliant with regulatory financial ratios and strengthen its position in the lending market.

Jamii Bora’s last published financials are for the first quarter of 2018. The Central Bank of Kenya (CBK) has not officially communicated if it gave the bank any exemptions.

The regulator requires all banks to publish their financial performance after every three months of trading.

Its liquidity ratio was negative 11.1 percent compared with CBK’s minimum of 20 percent as at end of March 2018, leaving it in liquidity deficiency of 31.1 percent. This leaves it constrained in terms of issuing new loans.

A bank’s liquidity ratio is a proportion of liquid assets calculated as a percentage of all its deposits, matured and other short-term liabilities.

The bank invested Sh500 million in loss-making Uchumi Supermarket #ticker: UCHM and lent Sh412 million to Kenya Airways #ticker:KQ, another struggling public entity.

Jamii Bora acting CEO Timothy Kabiru failed to respond to the Business Daily’s queries on the buyouts and the way forward.

Mr Gachora had indicated earlier that the next one year of NCBA would see the management focus more on carving out the best culture from the two separate entities that now run as one. It will also be opening 10 new branches in 2020.