Category Archives: NIC

NIC Bank shareholders approve merger with CBA at the 2019 AGM

NIC Bank shareholders met for their 2019 annual general meeting and approved a merger with CBA bank, creating Kenya’s second-largest bank (by customer deposits), a day after CBA shareholders had approved the same deal.

The merged bank will have about a 10% share of banking assets, deposits, and loans in Kenya. It will encompass the two groups serving over 41 million customers and their banking entities in Kenya, insurance (CBA Insurance and NIC Insurance), investment banking & stockbroking (CBA Capital, NIC Capital, NIC Securities), and regional subsidiaries in Tanzania (both banks), Uganda, (both banks) and Rwanda (CBA) and Côte d’Ivoire where MoMoKash is a CBA partnership with MTN and Bridge Group.

Group Managing Director John Gachora said scale is important in banking and that by merging NIC, which is known for asset finance and corporate banking, with CBA, which has desirable mobile banking and high net worth businesses, they would be the largest bank by customer numbers in Africa. CBA will be 53% shareholders in the merged bank.

NIC turns 60 this year, and in 2019, their focus will be on getting to Tier I ranking through the merger, and getting regulatory approvals after they had obtained shareholder approvals.  Directors also got approval to effect a name change (already under consideration) and the right to dispose of up to 10% of the assets of the bank without reverting back to shareholders. They will also create an employee share option program (ESOP) to retain key staff, and CBA, who already have an ESOP for their veteran staff (that owns 2.5% of that bank), will fold itself into the new incentive scheme. Other conditions of the merger include obtaining a waiver of capital gains and stamp duty tax in Kenya, approval of regulators in different countries, and approval of landlords and financial partners.

Bank Roundup: January 2019

The boards of NIC and CBA banks confirmed their plans to go ahead with a merger to create the largest bank in Africa by customer numbers. Serving over 40 million customers in 5 countries, the combined entity will have Kshs 444 billion in assets (~ $4.4 billion).

Currently, they are both at 115 billion of loans and have differences in deposits with 145 billion at NIC to 191 billion at CBA and customer numbers of 142,000 at NIC to 41 million at CBA. They had relatively similar customer numbers prior to CBA’s launch of M-Shwari in partnership with Safaricom. 

Going forward they aim to obtain shareholder approval in Q1, obtain regulatory approval in Q2 and have the new entity commence operations in Q3 of 2019. Currently, NIC has 26,000 shareholders and is listed on the Nairobi Securities Exchange (NSE) while CBA has 34 shareholders (20 individual, 14 corporations) including Enke Investments (24.91%), Ropat Nominees (22.50%), Livingstone Registrars (19.90%) and  Yana Investments (11.14%). The merger will be effected through share swaps that will result in NIC shareholders owning 47% and CBA shareholders 53% of the new entity whose shares will remain listed on the NSE.

MCB in Kenya:  Leading Mauritius Lender MCB Group has officially opened its representative office in Nairobi. The largest and oldest bank in Mauritius, with $12 billion in assets and a presence in nine countries, it had been licensed in Kenya back in 2015 and it will bank on its new office to gauge opportunities in the Kenyan market and build strategic relationships.

The 19th largest bank in Africa by assets, it is listed in Mauritius and has 19,000 shareholders. It has a strategic objective of growing its international footprint and expanding non bank activities. It has 1 million customers, 3,500 employees and 55 branches but, as it was communicated at the launch, they have no intention of opening branches in Kenya or East Africa.

Ethiopia Bank summary: Asoko Insight gave a summary report of the Ethiopian banking sector, parts of which are only available to subscribers. While some foreign investment is expected in Ethiopia, the banking sector is already privatized with fifteen of the country’s eighteen banks all having private local owners. The state-owned Commercial Bank of Ethiopia is the largest bank in the East Africa region with 1,280 branches and earns 67% of the sector profits in the country.  It has revenue of $1.3 billion, while 11 (other) banks, have revenues of between $50 million and $500 million, suggesting a more concentrated market in terms of size.

Tanzania:  NMB bank has waived several bank charges for their customers from February 1 including account opening, monthly maintenance, transaction fees, dormant account reactivation, and internal transfers – all in a bid to promote finance inclusion in the country.

Meanwhile, several Tanzania banks have a series of new managing directors including NIC Bank, Akiba Commercial Bank and Bank of Africa Tanzania

Family Bank pled guilty in the NYS case:

Diamond Trust CEO questioned.

Bank Rankings 2018 Part II: New Entrants

Following an earlier ranking of the top banks based on their asset size at the beginning of the year, what are Kenya’s top banks likely to be, nominally based on asset size at the end of the year? In 2018, Interest rate caps and IFRS9 have had an impact on bank performance while the departures of Imperial and Chase banks were announced.

Ranking using September 2018 numbers 

1. KCB Group – Kenya bank assets of Kshs 594 billion assets (and group assets of Kshs 684 billion).

2. Equity – Kenya bank assets of Kshs 424 billion (and group assets of Kshs 560 billion).

* 3 CBA/NIC – combined assets of Kshs 425 billion (as at September 2018) – if an announced merger deal is approved and completed. CBA and NIC are ranked 9 and 10 by assets, and will leap-frog Cooperative Bank, Barclays Kenya, Diamond Trust, Standard Chartered Kenya, Stanbic and Investment & Mortgages (I&M) banks.

4. Co-op Bank Kenya – asses of Kshs 398 billion.

Other new and interesting bank changes this year; 

12.  State-owned National Bank is in search of a shareholder deal to boost capital.

15.  SBM Kenya. The State Bank of Mauritius completed a carve-out and rebranding of assets, staff, branches and customers of Chase Bank in August. For the third quarter of 2018, it reported assets of Kshs 75.5 billion up from 11.7 billion in January 2018. It now has customer loans of Kshs 12.4 billion, customer deposits of Kshs 53.6 billion, and government securities of Kshs 34.8 billion. SBM entered Kenya two years ago by taking over Fidelity Bank that had assets of Kshs 15 billion in 2015 for just $1. KCB also is expected to conclude a takeover deal for collapsed Imperial Bank in 2019.

39. Mayfair Bank was licensed to operate in June 2017 and began operations later in August. Mayfair now has Kshs 5.3 billion in assets and operates three branches in Nairobi and Mombasa.

41 Dubai Islamic Bank – Kenya (DIB Kenya) with Kshs 4.1 billion in assets was licensed in April 2017. It, is the third Shariah-only bank in Kenya, after Gulf African (No. 23 with Kshs 32 billion of assets) and First Community (No. 31 with Kshs 16 billion assets). DIB Kenya is a fully-owned subsidiary of Dubai Islamic Bank which is one of the largest Islamic banks in the world.

$1 = Kshs 102.

CBA and NIC to merge

Jan 31, 2019 The boards of NIC and CBA have agreed to the merger and provided further details of the deal in Nairobi.

 

Dec 6, 2018 The boards of NIC Group and Commercial Bank of Africa have announced preliminary plans to merge. This follows talks that had been reported as far back as January 2015.

The move is driven by a need to consolidate capital and liquidity with new technology opportunities to provide more services to customers and grow returns for shareholders.

The merger of the eight and ninth largest banks in the country will result in a banking institution that will be the second or third largest by assets, behind KCB and Equity.  As of September 2018, NIC and CBA had a combined asset base of Kshs 443 billion ($4.3 billion) and Kshs 9.3 billion in pre-tax profits. 

CBA is already the largest bank by customer numbers thanks to M-Shwari, its partnership with Safaricom’s M-Pesa that had over 21 million customers last year.

More details will come later and NIC is listed on the Nairobi Securities Exchange.

Receiver to salvage Imperial Bank

Today the Receiver Manager of Imperial Bank, the Kenya Deposit Insurance Corporation and the Central Bank of Kenya issued a notice of, and a timeline for, the recovery of Imperial Bank.

This is a suprising about-turn from the perception for much of period since Imperial Bank was suddenly closed in October 2015, in which there appears to have been a leaning by the receiver-manager that Imperial was beyond recovery and that it should be liquidated. Today’s notice comes exactly a year after NIC Bank was appointed to liquidate Imperial bank assets and pay off Imperial’s depositors.


Now, the envisioned recovery process is similar to one being used for Chase Bank which is open, but still in receivership. Expressions of interest are invited from strategic investors. They will be evaluated and the short-listed ones will be given further confidential data to enable them to do due diligence and come up with formal offers that they will present to the to the receiver-manager to decide on. The process will take about a year.

This is a nice sign, but is it one that should have happened earlier? In the same period the fate of other troubled banks in the region has been concluded – in Uganda (Crane and Imperial) and in Rwanda (Crane, which was bought by Kenya’s CBA last week from DFCU of Uganda.