Companies

Co-op Bank finalises talks on Jamii Bora acquisition

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A Jamii Bora Bank branch in Nakuru. FILE PHOTO | NMG

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Summary

  • Jamii Bora Tuesday said it had received a binding offer from Cooperative Bank of Kenya in a deal that was first disclosed by the Central Bank of Kenya (CBK) on March 11.
  • Jamii Bora declined to disclose details of the offer, including the purchase price and whether it will be absorbed by Cooperative Bank and run as standalone subsidiary.
  • Co-op Kenya, which is mainly owned by members of co-operative movement, is the fourth-largest lender, controlling 9.63 percent of the market with 159 outlets.

Co-operative Bank of Kenya #ticker:COOP has finalised talks on purchase of 100 percent stake in Jamii Bora Bank, whose shareholders will on July 1 vote on the buyout offer.

Jamii Bora Tuesday said it had received a binding offer from Cooperative Bank of Kenya in a deal that was first disclosed by the Central Bank of Kenya (CBK) on March 11.

The deal is the latest instance of consolidation in Kenya’s banking industry and will see Cooperative Bank inject additional capital into Jamii Bora which, for instance, has suffered liquidity shortfalls that remain below the regulatory minimum.

“Following the conclusion of a thorough due diligence and a special board meeting held on Wednesday, June 3, 2020, the board approved for recommendation to the shareholders a legally binding offer from Cooperative Bank,” said Jamii Bora Bank chairman Richard Kiplagat.

“A special general meeting of shareholders will be held on July 1, 2020 to obtain requisite shareholder approval,” he said.

Jamii Bora declined to disclose details of the offer, including the purchase price and whether it will be absorbed by Cooperative Bank and run as standalone subsidiary.

Co-op Kenya, which is mainly owned by members of co-operative movement, is the fourth-largest lender, controlling 9.63 percent of the market with 159 outlets.

Jamii Bora is the second smallest of Kenya’s 39 lenders, with 0.12 percent market share and 17 branches.

The development comes months after the previous Jamii Bora suitor, Commercial Bank of Africa, dropped its acquisition bid and instead merged with NIC Bank to form NCBA Group #ticker:NCBA. CBA had in January last year made a Sh1.4 billion cash offer.

Jamii Bora’s last published financials are for the first quarter of 2018 when it had assets worth Sh12.5 billion.

Its liquidity ratio was negative 11.1 percent compared with CBK’s minimum requirement of 20 percent as at March 2018.