Kenya’s Cooperative Bank in talks to acquire Jamii Bora Bank

KENYA – The Co-operative Bank of Kenya is set to acquire 100 per cent shareholding in Jamii Bora Bank, bolstering the listed lender’s asset base and deepening the acquisitions in Kenya’s banking sector

This will see the tier-one lender strengthen its asset base to over KSh462 billion (US$4.62bn).

The transaction is subject to the successful completion of due diligence by the relevant professional bodies, approval by the Board of Directors and Shareholders of both Co-operative Bank of Kenya Limited and Jamii Bora Bank.

It is also subject to approvals by the Central Bank of Kenya, Capital Markets Authority and Competition Authority of Kenya.

The two banks have already informed Central Bank of Kenya (CBK), which is backing the transaction.

“CBK welcomes the transaction which will diversify the business models of the two institutions and enhance the stability of the Kenyan banking sector,” said CBK in a statement.

The development comes months after the previous suitor, Commercial Bank of Africa (CBA), dropped the acquisition bid and instead merged with NIC Bank to form NCBA group.

The due diligence will heavily inform the price to be paid by Co-op. CBA had in early January last year made a KSh1.4 billion (US$14m) cash offer to buy out Jamii Bora Bank.

“The board of directors of Co-operative Bank of Kenya has approved the progression of discussions with Jamii Bora Bank which, if successful, would lead to the Co-operative Bank acquiring the 100 percent shareholding in Jamii Bora Bank,” Co-op bank announced.

“The acquisition will strengthen both institutions leveraging on their respective well established domestic and regional corporate public sector, retail business and the 15-million-member co-operative movement.”

If successfully concluded the transaction is likely to lead to a shift in Co-op Banks share price on the Nairobi Securities Exchange.

“Accordingly, shareholders and the investing public are advised to exercise caution when dealing with the Company’s securities,” the lender said.

Jamii Bora Bank was established in 2010 after Jamii Bora Kenya Ltd, a microfinance was acquired by City Finance Bank Ltd in 2010.

The bank was ranked 38 out of 39 banks in terms of market share as at 31st December 2019 with a market share of 0.12 percent.

The deal will lead to changes in market share as well as deepening of branches for Cooperative bank. The tier I lender has 159 branches while Jamii bora has 17.

Jamii Bora’s last published financials are for the first quarter of 2018 when it had assets worth KSh12.5 billion (US$125m).

Its liquidity ratio was in 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.

The deal will deepen acquisitions in Kenyan market. Other banks that have been acquired in the recent past include National Bank of Kenya, Habib Bank Kenya, Fidelity Commercial Bank, Giro Commercial Bank, Equatorial Commercial Bank, K-Rep Bank and Fina Bank.

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