Kenya’s largest financial service providers, CFC Bank and its subsidiaries, is on course to concluding a merger with South Africa’s Stanbic Bank, which will make the bank the fourth largest financial institution in Kenya.
“We are on course and we believe the merger would take place on 30th of this month,” CFC Bank’s Chairman Charles Njonjo told the privately-owned daily, the Standard.
The merger of the two banks will create a US$1.2 billion financial institution, the fourth largest after Barclays Bank, Standard Chartered and the Kenya Commercial Bank.
South Africa’s Reserve Bank has given its statutory approval to the merger of the two financial institutions, which will see the South African bank become part of the CFC Bank, which also owns several other financial services companies.
Kenya has about 46 banks and several micro-finance institutions.
The country is considered to have one of the most advanced financial markets in Eastern Africa and partly acts as a source of foreign capital injection into Africa.
CFC Bank and Stanbic Bank, one of the leading financial services brands across Africa, commenced merger negotiations in Nairobi in March 2007.
The two institutions have been working out legal and institutional reforms within the two organisations.
CFC Bank owns a number of financial service outfits, extending from the formal banking to insurance and micro-finance businesses.
It also owns CFC Life, formerly the Alico Insurance which it acquired in mid 2005.
CFC also owns Heritage AII, also an insurance company, and CFC Financial Services, a stock brokerage firm which has made huge profits from the growth experienced in the Kenyan stock market and the listing of several firms over the last three years.
It is not clear whether the Central Bank of Kenya (CBK) has given its approval to the merger, which will make CFC Bank a key player in the Kenyan financial market.
The new outfit will comprise 12 banking outlets, big enough, but not too big to scare Kenya’s big banking players which command outlets ranging from 40 to 100 outlets, with huge cash dispensing points spanning the width and breadth of the Kenyan landscape.
Njonjo, Kenya’s independence Attorney-General, said the bank’s merger would pave the way for the bank’s regional expansion across the Eastern Africa region, beginning with Southern Sudanese capital of Juba, which has attracted Kenyan Commercial Bank.
South Sudan is lucrative for bankers, especially those eying corporate banking opportunities for non-governmental organisations and corporate firms operating from outside the Sudan but with oil drilling operations in the South.
“We are looking at it now and with this merger, the impetus is there,” Njonjo said.