- This follows regulatory approvals by CBK and the National Treasury
- The tier three lender’s liquidity ratio stood at negative 11.1 per cent in March 2018, far short of the minimum statutory requirement of 20 per cent.
Co-operative Bank Group has finally acquired mid-tier lender, Jamii Bora Bank, Central Bank of Kenya has announced.
This follows CBK's approval on August 3, under section 13 (4) of Banking Act and approval by Treasury cabinet secretary the following day.
In a statement, the apex bank said the transaction will diversify the business model of the two institutions, benefiting Co-op Bank's shareholders and enhancing the resilience of the Kenyan banking sector.
Last month, JBBL shareholders unanimously backed the proposal in an extra-ordinary general meeting that allowed Co-op Bank to acquire a 90 per cent stake and rights to appoint the board to run the tier III lender.
In the transaction, Co-op Bank will be issued with 224.1 million new “Class A” shares equivalent to 90 percent shareholding, while the stake of the existing shareholders will be diluted to 10 per cent.
JBB’s existing issued 24.9 million ordinary shares of Sh66 each will now be re-designated and re-classified as Class B ordinary shares, giving owners room to share in future profits as opposed to cashing out at once.
The Jami Bora buyout is a sigh of relief to its investors who continues to incur losses due to the lender's poor cash liquidity on barren investments.
Jamii Bora invested Sh500 million in struggling Uchumi Supermarket, with another Sh412 million lent to Kenya Airways, which has been on a loss-making streak.
The tier three lender’s liquidity ratio stood at negative 11.1 per cent in March 2018, far short of the minimum statutory requirement of 20 per cent.
In January, Commercial Bank of Africa's (CBA) dropped its offer of Sh1.4 billion to Jamii Bora and instead opted to with NIC Bank to form NCBA Group.
This becomes the latest acquisition in the banking sector that has seen consolidation take shape. Other such deals have been between KCB Bank and National Bank.