Kenya: KCB Grosses U.S.$10 Billion in Assets, Eyes Buyouts in DR Congo, Ethiopia

KCB's acquisition of two banks in Rwanda and Tanzania has pushed its total asset base to over Ksh1 trillion ($10 billion), creating a regional banking giant with a re-energised ambition to join the ranks of leading pan-African banks, currently dominated by Southern and West African banks.

"This is a significant milestone and very historic positioning. You can only cross the Ksh1 trillion mark once. It is something we have been looking forward to but let me also qualify it that it is definitely not the limit for us," the Groups' chief executive Joshua Oigara told The EastAfrican in an interview on Friday.

"We are still a medium-sized institution across the continent and we are relatively a small bank globally...we still have more opportunities and we will continue to see areas like the Democratic Republic of Congo and Ethiopia as areas of focus for us."

Last year, KCB Group acquired the struggling state-owned National Bank of Kenya (NBK) and took over the good assets of Imperial Bank which was put under receivership by the Central Bank of Kenya on October 13, 2015.

Last week, KCB, which is listed on the Nairobi Securities Exchange (NSE), moved to strengthen its banking business in Rwanda and Tanzania by acquiring Banque Populaire du Rwanda Plc (BPR) and African Banking Corporation Tanzania (BancABC) currently owned by the Atlas Mara Ltd (ATMA).

The two parties signed an acquisition agreement for the two banks (BPR and BancABC) for Ksh4.37 billion ($43.7 million).

Under the deal, KCB will acquire 62.06 percent stake in BPR for Ksh3.5 billion ($35 million) and a 100 percent stake in BancABC for Ksh878 million ($8.78 million).

KCB's total assets during the nine months to September 30 stood at Ksh972 billion ($9.72 billion) while the new acquisitions -- BPR and BancABC -- have a combined balance sheet of about Ksh42 billion ($420 million), bringing KCB's total assets to Ksh1.01 trillion ($10.1 billion), with about 20 million customers.

The transaction is however subject to shareholder and regulatory approvals in the respective countries.

"Our expansion ambition is also taking Kenyan businesses overseas. It is giving our Kenyan shareholders and stakeholders an opportunity to take advantage of the emerging market opportunities within the East African region. These are very strong progressive actions we are taking ... we are seeing the fruits of all our strategies being achieved in these transactions," said Mr Oigara.

Regional reach

KCB currently operates in six countries -- Kenya, Uganda, Tanzania, Rwanda, Burundi and South Sudan -- and runs a representative office in Ethiopia.

"Our market is very much where we are at the moment. There is the East Africa Community, the DRC, which is a very close friend here and Ethiopia. We call it the East African cluster as a key priority market for us.," said Mr Oigara.

In Rwanda, upon completion of the acquisition, the resultant KCB Group business is expected to see KCB double its market share to become the second largest bank in the country and solidify KCB Group's leadership position.

"We view KCB's intended purchase of the ATMA subsidiaries as a positive," according to analysts at Standard Investment Bank (SIB).

In Tanzania, the subsequent merger of BancABC with KCB Bank Tanzania, a subsidiary of KCB Group, will integrate KCB Tanzania's strong retail and corporate banking franchise with BancABC's retail and commercial banking operations.

The merged entity is expected to rank as a top ten bank in the industry.

"Our growth strategy is premised on both organic and inorganic plans and we shall continue to seek opportunities that increase our shareholder's value," said Mr Oigara.

In June, Equity Bank's ambitious plan to acquire 100 per cent shareholding in BancABC of Zambia, Mozambique and Tanzania including 62 per cent of the shares of Banque Populaire du Rwanda Ltd fell through after 16 months of protracted negotiations with the London Stock Exchange (LSE) listed Atlas Mara Ltd (ATMA).

As a result, the lender said it had halted its cross-border expansion bid after the failed acquisition of four banks in Rwanda, Zambia, Tanzania and Mozambique.

Under the deal Equity Bank would have surrendered about 252.5 million new ordinary shares representing 6.27 per cent of the bank to ATMA valued at Ksh10.7 billion ($107 million).

Atlas Mara Ltd is listed on the London Stock Exchange (LSE) with presence in seven Sub-Saharan African countries.

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