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The Competition Authority of Kenya gave Nigeria’s biggest lender the go-ahead to acquire 93.57% of Transnational Bank Ltd., as consolidation in the East African nation’s banking industry gathers pace.
Access Bank Plc’s purchase follows the merger of NIC Group Plc and Commercial Bank of Africa Ltd., and KCB Group Ltd.’s acquisition of National Bank of Kenya Ltd. earlier this year. Access Bank joins other Nigerian lenders Guaranty Trust Bank Ltd. and United Bank of Africa Plc in operating in the Kenyan market.
The deal bodes well for the Central Bank of Kenya’s push for consolidation in an industry of more than 40 lenders and a population of almost 50 million people. Kenya has more banks per person than South Africa and Nigeria, Africa’s two largest economies.
In the past two years, SBM Holdings Ltd. of Mauritius bought up some of the assets of Chase Bank Kenya Ltd. and the entire capital of Fidelity Commercial Bank Ltd.
Transnational, which swung to a full-year pretax loss of 98.5 million shillings ($951,690) in 2018, lends mainly to the agricultural sector, according to its annual report. Non-performing loans ballooned 58% to 1.85 billion shillings, while loans rose 0.5% to 6.63 billion shillings, The bank’s focus is on financing agribusiness, including purchase of seed and fertiliser and other farm inputs. It also deals in asset financing for farmers to acquire machinery and equipment.
Its core capital stands at around Ksh2 billion ($20 million) compared with the statutory requirement of Ksh1 billion ($10 million).
The banking sector has seen acquisitions of eight small and medium-sized lenders over the past five years, as their management and regulators sought to avoid a potential crisis prompted by depositors shifting funds to the big banks.
BINNABOOK PUBLISHERS
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