NIC Group’s shareholders have approved its merger with the Commercial Bank of Africa, the company said on Wednesday, paving the way for the two companies to create the third-biggest bank by assets in east Africa.
“Whilst a new name is yet to be selected, both NIC and CBA are jointly working with external brand consultants to identify a name that will reflect the identity, values and aspirations of the new merged entity,” NIC’s Chairman James Ndegwa said.
The deal is subject to approval from regulators and NIC expects the process to be concluded in the third quarter of 2019.
In January, the two banks announced the planned deal in which current NIC Group shareholders would own 47 per cent of the merged entity and CBA shareholders 53 percent. Last month, CBA said its shareholders had accepted a share swap with NIC Group.
Should it go through, it will mark the first major merger in the sector since the government imposed a cap on commercial interest rates in 2016.
The cap piled pressure on Kenyan banks to consolidate as it hit second-tier lenders’ ability to price risk, affecting the quality of loans and forcing lenders such as NIC to consider suitors, analysts have said.
A court decided in March that the cap was unconstitutional, but suspended the ruling for 12 months to allow parliament to re-examine the law.
“I’m delighted that our shareholders share our vision and have overwhelmingly supported this important merger that will create a leading Tier 1 bank,” Ndegwa said in a statement.