The Competition Authority of Kenya (CAK) has approved the proposed merger between Commercial Bank of Africa (CBA) and NIC Group Plc.
In arriving at the decision, the competition watchdog said it expects the resultant merged entity, with a market share of 10.67%, to still face competition from tier I banks who, together, control 55.32% of the 42-bank market.
“Based on the foregoing, the Authority’s view is that the proposed transaction is unlikely to lead to lessening of competition in the relevant product market for retail and corporate banking services in Kenya,” said CAK.
The same is expected of the bancassurance business where both parties are active as short-term insurance sales agents for various underwriters on a non-exclusive basis.
Their combined bancassurance market share is less than one per cent and CAK therefore says this is unlikely to raise competition concerns.
Retain employees
However, the two entities will have to retain all the employees for at least one year.
CBA and NIC had said there was a possibility of branch closures where overlaps exist.
The proposed merger will see CBA shareholders exchange their CBA shares for 53% of the new shares in NIC, which will be the non-operating holding company for the merged entity.
Shareholders of CBA, with 98.15% stake of the issued and fully paid up share capital have already accepted the deal.
The deal is expected to be finalised in the second quarter of 2019.
Combined profit
According to the recently released December 2018 numbers, the combined net profit of CBA and NIC stood at KSh9.23 billion.
This is Sh3.47 billion lower than Cooperative Bank’s Sh12.7 billion net profit.
CBA’s profit after tax fell by 9.7% from KSh5.54 billion to KSh5 billion while NIC’s bottom-line grew by a modest two per cent to KSh4.23 billion during this period.
