The Kenyan Banking sectors’ consolidation has gathered pace as Diamond Trust Bank (DTB) has announced plans to acquire Habib Bank.
The deal that is waiting for regulatory approval both in Kenya and Pakistan is the latest addition to the seven acquisition deals that have been struck in Kenya in the last three years.
The seven deals include, Mauritian Bank SBM Holdings acquiring 100 per cent stake in Fidelity Commercial Bank as well as Tanzanian Bank, Bank M acquiring 51 per cent of Oriental Commercial Bank; GT Bank also acquired Fina-Bank while Mwalimu SACCO acquired Equatorial Commercial Bank.
I&M Holdings acquired Giro Bank while Centum Investments acquired K – rep Bank now known as Sidian Bank.
Also Chicago-based private equity fund Equator Capital Partners LLC, under its ShoreCap II fund bought 15 per cent stake in Jamii Bora Bank.
These deals are worth about Kes23.3 billion ($226 million).
Habib Bank has been operating in Kenya since 1956 when it opened its first branch in Mombasa and was ranked 33rd out of 41 banks with a market share of 0.34 percent.
On the other hand, DTB is ranked 6th out of 41 banks with a market share of 6.1 percent as at December 31, 2016 and a network of sixty one branches around the country.
“DTB commenced operations in 1946 as a financial institution. It converted into a fully-fledged commercial bank in 1997 and subsequently merged with Premier Savings and Finance Limited in March 1999,” CBK states.
The capping of Interest Rates at 4 percent above the central banks’ lending rate has seen most banks record a decline in profitability in their 2017 full year results with reduced net interest margins.
KCB Group posted flat net profit while Barclays Bank of Kenya’s net profit dropped by 12 percent.
Equity group net profit declined by 4.1 percent to Sh16.6 billion. Stanbic Bank also reported a 10 percent drop in 2016 net profit.