KCB Group Plc shareholders have approved the proposed acquisition of DRC-based lender Trust Merchant Bank SA (TMB).
The approval, in Nairobi, was at an Extra Ordinary General Meeting on September 21, 2022.
- KCB Group Plc shareholders approved the proposed acquisition of DRC-based lender Trust Merchant Bank SA (TMB)
- With total assets of US$1.5 billion, TMB, a public company limited by shares, ranks as one of the biggest banks in the DRC
- TMB will increase the asset base of the KCB Group by sh1.5 trillion (US$12.6 billion ) and is anticipated to improve the Group’s corporate and retail banking franchises
In August 2022, KCB Group Plc reached a definitive agreement to acquire TMB from its shareholders. According to the terms of the agreement, KCB will buy 85% of TMB’s shares, while existing shareholders will retain the rest for at least two years, which after KCB will have the opportunity to acquire their shares.
The acquisition is part of KCB’s continued strategy to increase regional participation, accelerate growth, and maintain long-term regional success while investing in and maximising returns on existing businesses. It will allow KCB to transact in the DRC market, which is the new face of the East African Community.
“The shareholders’ nod is a critical milestone for us to advance the acquisition process, that will allow us to ramp up our balance sheet, revenue streams, and contribute favourably to KCB’s growth and diversification objectives,” KCB Group Chairman Wambari Kairu said during the meeting.
“In turn, by utilising TMB’s 18 years of operational history and extensive branch network, KCB will be able to develop its footprint within DRC quickly,” Mr. Kairu said.
“In addition, the acquisition will give KCB a strong competitive position, boosting its potential to compete with other financial institutions in the DRC and across the region. This will help KCB accomplish its long-term vision and goal and benefit shareholders, clients, and workers in the long run,” he continued.
With total assets of US$1.5 billion, TMB, a public company limited by shares, ranks as one of the biggest banks in the DRC. TMB has a robust portfolio in the retail, SME, corporate, and digital banking channels.
With over 109 branches in the DRC and multiple agency banking locations. The deal will give KCB a solid foundation to diversify its offers in the area with the help of an insurance subsidiary called Affrissur SA.
“The merger was approved; it demonstrates our shareholders’ trust in the deal’s strategic and financial aspects and the value it delivers to our regional clients and communities.
After the purchase is complete, the combined business will have immediate scale benefits to create outstanding value with a shared customer-centric strategy and expanded client capabilities in a fast expanding market,” KCB Group CEO Paul Russo said.
The deal is anticipated to close before the end of the year, barring any necessary regulatory approvals or other closing conditions.
The Group’s strategic goal of expanding its regional presence is consistent with this acquisition. Once finished, TMB will increase the asset base of the KCB Group by 1.5 trillion sh (US$12.6 billion ) and is anticipated to improve the Group’s corporate and retail banking franchises.
After the agreement, KCB will compete against Equity Group, which bought its way into the DRC in 2015 and increased its market share in 2020 by acquiring another lender, Banque Commerciale du Congo (BCDC).
KCB increases its presence in East Africa
After KCB Bank Rwanda and Banque Populaire du Rwanda merged (BPR) in May 2022, the KCB Group increased its share in its Rwandan subsidiary by an extra 10.8% to 87.5%.
In a deal completed last year, the Kenyan banking behemoth acquired a 62 per cent share from London-based Atlas Mara Limited, and an additional 14 per cent from private equity company Arise. It then set its sights on capturing the remaining 24 per cent held by minority owners.
The National Bank of Rwanda (BNR), Rwanda’s banking watchdog, gave KCB regulatory approval in March to merge the operations there, resulting in a more significant stake thanks to the infusion of KCB Rwanda’s assets into the combined entity.
Through the transaction, KCB expanded its retail banking presence in Rwanda. Before the merger, BPR held a 10.2 per cent market share, which, coupled with KCB Rwanda’s six per cent stake, allowed it to surpass Equity Bank Rwanda, which was in second place with 11 per cent of the market.