The Proposed transaction will see KCB acquire Banque Populaire du Rwanda Plc (BPR) and African Banking Corporation Tanzania (BancABC).
KCB Group Plc (KCB) and Atlas Mara (ATMA) have signed a definitive agreement which will see East Africa’s biggest Bank by assets increase its footprint within the region.
This is through the acquisition of a 62.06% stake in Banque Populaire du Rwanda Plc (BPR) and a 100% stake in African Banking Corporation Tanzania Limited (BancABC) from ATMA in Rwanda and Tanzania, respectively.
The successful completion of the transaction is subject to obtaining shareholder approval and to obtaining regulatory approvals in the respective countries.
KCB Group CEO and MD Joshua Oigara said the transaction was part of KCB’s ongoing strategy to explore opportunities for new growth while investing in and maximizing returns from the Group’s existing businesses. The acquisition, he added, will buttress the Group’s leadership position and give it a stronger edge to play a bigger role in driving the financial inclusion agenda in the East African region while building a robust and financially sustainable organization.
“The transaction fits within the Group’s expansion strategy and will see us increase our market share and distribution network across Rwanda and Tanzania and improve our operating leverage by enabling us to deliver our existing product offerings to a wider base of customers while positioning the bank for sustainable growth in the long-term, ” said Mr. Oigara. “Once the transaction is completed, the Group’s Rwanda and Tanzania businesses are expected to have stronger financial credentials to support business growth in the post covid-19 macroeconomic recovery” he added.
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.
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.
KCB Group, which has presence in six countries and a representative office in Ethiopia, has been keen to tap into new growth opportunities while reinforcing existing market capabilities.
“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.
KCB Group Plc after-tax profits for the nine months ending September 2020 stood at KShs.10.9 billion. The Group’s balance sheet expanded 27% to KShs.972 billion, funded by customer deposits growth and acquisition of NBK. Net loans and advances grew 19% to close the period at KShs. 577.5 billion while customer deposits were up 32% to KShs. 772.7 billion.
The Group maintained healthy buffers on its capital ratios over the minimum regulatory requirement. The Group’s core capital as a proportion of total risk weighted assets closed the period at 17.8% against the Central Bank of Kenya statutory minimum of 10.5%. Total capital to risk-weighted assets stood at 19.6% against a regulatory minimum of 14.5%.
In what reaffirms the Bank’s strong credentials, KCB Group Plc was ranked at position 667 globally in The Banker’s Top 1000 World Banks ranking for 2020, climbing 40 places in a survey that shows a stabilization in the finances of the majority of African major lenders. The performance is an improvement from position 717 last year in the ranking which tracks the health and wealth of the global banking sector. In 2018, KCB was ranked 809.