Last week on Thursday the two lenders top management hinted to be in the final stages of discussions that if approved by the Competition Authority Kenya (CAK), would lead to the establishment of the third largest lender as grouped in terms of assets owned. The merger of
The move has received a go-ahead signal after the National Treasury Cabinet Secretary, Henry Rotich endorsed the move citing strengthening of the financial and banking sector which would facilitate penetration into the international markets. Another, advantage likely to accrue from such a merger is the consolidation of customers to ensure that they have a one-stop bank where they can get the services required and thus this is likely to improve customers loyalty.
Additionally, the move would ensure that the two banks have consolidated deposits which would help them serve their customers better since CBA is the proud partner in the Mshwari deal, a mobile loan facility operated by Safaricom via Mpesa. In
Another reason why the merger is welcome is the fact that in the past two years we have seen banks such as Imperial Bank, Chase Bank and Dubai Bank being placed under receivership by the regulator Central Bank of Kenya due to lack of liquidity which resulted to failed operations by some of them with Chase Bank being acquired by SBM Bank (a Mauritius based lender)earlier this year. Therefore, this move will build customers confidence as the resultant bank from the merger would be a tier 1 bank.
Whether the merger pushes through or not remains to be a wait and see and purely in the hands of the shareholders of the two institutions, the Competition Authority of Kenya and the Central Bank of Kenya to approve or disapprove it. If approved the bank will become the third largest bank in terms of assets owned, coming after KCB Bank and Equity bank respectively.