National Bank of Kenya will be operational for a year if the merger deal with Kenya Commercial Bank goes through, the latter's chief executive Josua Oigara said late on Friday.
In April, KCB Group Plc declared its intention acquire 100 per cent stake of National Bank of Kenya through a share swap deal, comprising of 10 ordinary shares of NBK for every 1 ordinary share of KCB.
Oigara welcomed the ongoing consolidations in the Kenyan banking sector.
“I am a big fan for the ongoing mergers and acquisitions because it is better for banks to operate in large entities in assets value than small ones,” Oigara said.
KCB is also planning to open a representative office in China, to take advantage of growing trade links between East Africa and China, he said.
The requirement to establish such entity is about one trillion in asset base.
The entry may come after consolidation with NBK after which the bank currently with Sh714.3 billion in total assets as per its 2018 financial results will have the muscle for entry.
“It is very expensive to open a bank in such country but we are still geared to have a representative office there,” he said.
The bank’s offices will facilitate deals in syndicated lending, specialised, project and trade finance.
While there are no Kenyan banks' representative offices in other countries, there are at least eight representative offices of foreign banks in the country.
He said KCB plans to buy a bank in Rwanda and one in the Democratic Republic of the Congo (DRC).
Oigara did not reveal the identity of the two banks the lender is considering acquiring or the timeframe.
Kenyan banks have announced several deals since the government capped commercial lending rates in 2016, crimping their profit margins and forcing them to look for survival strategies, including consolidation.
CBA Group, a privately held bank, is in the process of merging with NIC Bank to form the third biggest bank by assets in East Africa.
The second largest bank by assets, Equity Group, said last week it was in talks with London-listed financial services firm Atlas Mara Limited about acquiring stakes in banks in Rwanda, Zambia, Mozambique and Tanzania.
Smaller transactions have included Diamond Trust Bank’s acquisition of Habib Bank Kenya in 2017.
