NIC Bank Managing Director John Gachora (left) with his CBA counterpart Isaac Awuondo brief journalists in Nairobi last week. When Kenya’s two powerful bankers – Commercial Bank of Africa (CBA) Group Managing Director Isaac Awuondo and NIC Bank boss John Gachora – recently shared the stage as a show of equal footing in the merger of NIC Bank and CBA, questions were raised as to who will be left standing at the end of the year. Head of banking research at Ecobank Capital, George Bodo voiced this question in the stormy waters of the merger as to how the management change. “The governance structure will be subject to shareholder approvals, so we will go through the process and make announcements,” said NIC Bank Chairman James Ndegwa. Besides the name and the new bosses, weaving together the country’s third-largest lender owned partly by the Kenyatta and the Ndegwa’s families looks like a piece of cake.
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It is not. The deal needs to iron out perceptions, close ranks with unfinished business and even wade through uncertain waters that have always trailed mergers. The first issue that would not go away was CBA’s dalliance with Jamii Bora Bank which has been seeking a strategic investor to navigate liquidity constraints in a tough market. Jamii Bora which is said to have attracted the interest of one private equity firm, a local lender and telecoms company offers an understanding of the SME market, especially leveraging stock financing through the Boresha Stock loan. This has seen retailers and wholesalers of fast moving goods get weekly facilities to satisfy customer demand. And for CBA which piggybacked on a partnership with Safaricom to launch M-Shwari that has won the hearts of many Kenyans, especially the youth with minimal branch networks, this looked like a real prospect. This has been cemented by Kenya’s history of leveraging the small yet risky sector as witnessed by the success of Equity Bank Market analysts say Jamii Bora could offer an edge – having angled to ride on Uchumi Supermarket’s retail banking at low-cost locations and understanding of balance sheet financing.
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Mr Awuondo noted that some of these overtures might now be abandoned to concentrate on the bigger picture – the merger. “I am not aware of that statement around […]
