Rare merger wave hits local banking industry

The year saw Kenya’s banking sector record several mergers and acquisitions and more are predicted in the next two years as capital raising options diminish for smaller struggling lenders.

Nigeria’s largest retail lender, Access Bank Plc, acquired Kenya’s Transnational Bank associated with retired President Daniel arap Moi. The bank’s profits have been on a decline from Sh168 million in 2015 to a loss of Sh71 million last year.

Loss-making Mayfair Bank linked to politician Peter Kenneth is being sold to a leading Egyptian bank, the Commercial International Bank, just two and a half years since it started operations.

Bleeding Spire Bank is also looking for a strategic investor as is Jamii Bora Bank and Consolidated Bank.

Rare merger activity has also been recorded at the top band of the country’s banking sector.

Kenya’s largest bank by assets — KCB Group — this year acquired capital-starved National Bank of Kenya (NBK).

Commercial Bank of Africa and NIC Bank are concluding a merger, expected to create the country’s third-largest bank by assets.

With more than 40 banks in the market, many financial sector analysts have for several years now said the sector is overbanked and that consolidation was the way out especially for mid and lower-tier lenders.

“We are not done yet and there is all indication of more market-driven consolidations in the banking sector,” said Central Bank of Kenya (CBK) Governor Patrick Njoroge.

In Kenya and Tanzania, the top five banks account for 46 per cent and 55 per cent of the sector assets respectively.