KCB Group plans to acquire two banks in Tanzania and Rwanda and pay Ksh. Sh4.39 billion in a bid to deepen its presence in East Africa.
The biggest bank in Kenya by asset base announced that it will acquire a 100 percent stake in African Banking Corporation Tanzania Limited (BancABC) and a 62.06 percent stake in Banque Populaire Du Rwanda (BPR).
According to the lender which has a presence in the two markets, it signed a share purchase agreement with London-based Atlas Mara Limited, and the acquisition is expected to be completed within six months.
Already, the bank has operations in Rwanda, Burundi, Tanzania, Uganda and South Sudan and wants to strengthen its position in those markets and beyond. This is according CEO Joshua Oigara who told an online news conference after the deal was announced.
This move is also similar to what the bank and other Kenyan banks have done in the past as they seek to tap opportunities available in the region at the same time driving rapid economic growth and trade integration.
KCB’s main rival Equity Group had initially bid for the two banks alongside the African Banking Corporation of Zambia and African Banking Corporation Mozambique. However, the deal was canceled after 14 months of negotiations.
KCB Group CEO Oigara Said, “When you build transactions growth through business combinations and acquisitions, you don’t stop.”
He added that “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.”
KCB intends to push with acquiring the remaining share of the Rwandan bank who has a combined stake of 37.94%.
By acquiring the BPR, KCB will double its market share and become the second largest bank. Currently it sits at the sixth position.
Mr. Oigara said the acquisition of BPR will see KCB double its market share to become the second-largest from the current sixth position. In Tanzania, he expects the bank to break into the top 10 from the current 13th position.