DTB to complete Habib Bank acquisition in July

Top tier lender Diamond Trust Bank (DTB) #ticker:DTK aims to complete the acquisition of Habib Bank Limited in July and consolidate operations of the two lenders’ by April next year.

DTB shareholders are expected to ratify the deal at their upcoming annual general meeting on May 25, with the target date for completion of the deal being July 21.

DTB is buying the tier-three lender for Sh1.82 billion, compensating Habib’s owners through an allotment of 13.28 million DTB shares.

These shares are expected to start trading at the stock exchange on July 31.

“The completion of the transaction is subject to closing conditions that include procurement of shareholders’ approvals as well as regulatory approvals from various regulators including the State Bank of Pakistan, the Central Bank of Kenya, the Competition Authority of Kenya and the Capital Markets Authority which DTB expects will be concluded in the first half of 2017,” said DTB in a circular to its shareholders.

“Following Completion, DTB will integrate the Habib Kenya Branch operations into its systems. The board is of the view that this integration will be concluded within six to nine months of completion (of the deal).”

READ: DTB buys Habib Bank for Sh1.8bn in share swap deal

Market share

Habib’s market share stood at 0.34 per cent last year, with five branches and a workforce of 53 employees.

DTB’s market share stood at 6.1 per cent with 61 branches across the country.

It is expected to grow its this share by 0.3 per cent following the Habib acquisition.

In 2016, DTB reported a net profit of Sh7.7 billion, representing a 17 per cent increase from 2015.

Habib reported a 2.5 per cent increase in its net profit for 2016 to Sh306.2 million.

The deal continues a trend of larger banks buying out their smaller rivals, with the most recent deals being the sale of Giro Commercial Bank to I&M Holdings and Fidelity Bank to Mauritius’ lender SBM Holdings.