NAIROBI (Reuters) - 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.
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 percent of the merged entity and CBA shareholders 53 percent. Last month, CBA said its shareholders had accepted a share swap with NIC Group.
“I’m delighted that our shareholders share our vision and have overwhelmingly supported this important merger that will create a leading Tier 1 bank,” NIC’s Chairman James Ndegwa said in a statement.
CBA shareholders approved the merger on Tuesday following the company’s annual general meeting.
With over 41 million customers, the combined entity would be the largest bank in Africa by customer numbers, NIC said.
Should the deal 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.
Reporting by Omar Mohammed, editing by Louise Heavens and Emelia Sithole-Matarise