Treasury, CBK give nod for Jamii Bora buyout by Co-op Bank

Cooperative Bank of Kenya #ticker:COOP will officially acquire 90 percent stake in Jamii Bora Bank on August 21, Central Bank of Kenya (CBK) has announced.

The banking regulator said in a gazette notice on Friday that the deal has received all the required regulatory approval, the latest being by National Treasury on August 4.

Co-op Bank early March opened talks to buy a majority stake in Jamii Bora Bank. The two parties valued the deal at Sh1 billion, which was endorsed by Jamii Bora shareholders.

“CBK welcomes this transaction which will diversify the business models of the two institutions, benefitting Co-op Bank’s diverse shareholders and enhancing the resilience of the Kenyan banking sector,” CBK said in a press statement.

The deal takes off at a time the banking sector activities are facing depression due to Covid-19 pandemic that has also affected all the sectors of the economy.

Co-op Bank board resolution will be tabled at the lender’s next annual general meeting for ratification, CBK said.

In the deal, Co-op Bank has been issued with 224.1 million new “Class A” shares equivalent to 90 percent shareholding, while the stake of the existing Jamii Bora shareholders will be diluted to 10 percent.

Co-op Bank’s growth strategy has been more focused on expanding in Kenya as opposed to expanding beyond borders.

Outside Kenya, the lender owns 51 percent stake in Co-op Bank South Sudan. It also holds stakes in Kingdom Securities, CIC Insurance and Co-op Fleet Africa Leasing Limited.

Global rating agency Moody’s had in April said that it expects Jamii Bora deal to serve as a springboard for Co-op Bank to raise the share of the loan book to the small and medium sized enterprises.