The Central Bank of Kenya (CBK) has cleared the acquisition of a 51 per cent stake in the shareholding of Oriental Commercial Bank by Bank M of Tanzania setting the stage for its entry into Kenya.
The regulator said Thursday it had also approved an application by M Holdings Limited to form a Non-Operating Holding Company as required by law as well as a change of name from Oriental Commercial Bank Limited to M Oriental Commercial Bank Limited.
“The transaction and consequent changes are expected to be completed by September 2016,” said CBK in a statement.
The regulatory approvals now set the stage for Bank M of Tanzania, to become the first Tanzanian lender to enter the Kenyan market after 73 per cent of its shareholders under the M Holdings Group agreed to buy 51 per cent stake in Oriental Commercial Bank.
Oriental Commercial Bank is classified as a small lender by the CBK and was formerly Delphis Bank Ltd.
It was licensed to operate in Kenya in 1991, and was ranked 37th in terms of market share as at 31 December 2015, with nine branches.
Bank M of Tanzania was licensed in February 2007, and is focused on corporate and investment banking. It becomes the first bank from Tanzania to enter the Kenyan banking sector.
The deal had earlier received the nod of the Competition Authority of Kenya.
CBK gave the initial green light in May last year.
Deal valued at Sh1.3bn
Last year Oriental shareholders approved the allotment of 42,281,893 ordinary shares valued at Sh30 each to M Holdings valuing the deal at Sh1.3 billion.
M Bank has a deposit base of Sh31.8 billion and a loan book of Sh33.5 billion.
Oriental Commercial Bank recorded a profit drop for two years in a row last year after it posted net earnings of Sh43 million down from Sh72 million in 2014 and Sh140 million a year earlier.
It has a deposit base of Sh6.2 billion and a loan book of Sh5.2 billion.