Kenyan bank tie-up creates bigger rival for West Africa lenders

Plans to merge two Kenyan banks will create a lender that can compete adequately with West African banks that are expanding into the region, Treasury Secretary Henry Rotich said.

NIC Group Plc, one of Kenya’s mid-sized publicly traded banks, is in merger talks with Commercial Bank of Africa Ltd, the nation’s biggest closely held lender, the two said last week. The combined entity would rank among the country’s top three lenders.

Rotich welcomed the move, saying the stronger bank would avail more credit in East Africa’s biggest economy and take on rivals from West Africa that have made forays into the region. Guaranty Trust Bank Plc, Nigeria’s largest lender by market value, and United Bank for Africa Plc, its third-largest lender by revenue, have operations in East Africa.

The boards of Commercial Bank of Africa Limited and NIC Group PLC have authorised the commencement of discussions, regarding a potential merger of the two entities.

Both NIC and CBA already operate in Uganda and Tanzania, and CBA has ambitions to operate in 16 African nations.

“One of the biggest constraints we have seen is that Kenyan banks have not been able to play a big role because of their size,” Rotich told reporters in the Kenyan capital, Nairobi.

Kenya has about 40 lenders, more per person than South Africa and Nigeria, Africa’s two biggest economies.