Chairman Kenya Bankers Association Joshua Oigara. [File, Standard] KCB Group might have taken the wrong path to regional banking supremacy.
The Tanzanian route is somewhat jinxed.
The listed lender’s foray into the region might have started in Tanzania where it launched its operations away from home in 1997, but Dar es Salaam has not warmly embraced the Kenyan bank.
Indeed, many other Kenyan businesses with the ambition to scale higher commercial heights have found the going tough in Tanzania.
Last week, Tanzanian authorities threw into disarray KCB’s bid to acquire African Banking Corporation Tanzania (BancABC Tanzania) following what the lender said were delays in approval from regulators. READ MORE
The planned deal was expected to significantly increase the lender’s balance sheet.
In an earlier interview with The Standard, KCB Group Chief Executive Joshua Oigara had hinted that the reason for the delay in the completion of the deal was due to “shareholder disagreements”.
“It has taken a bit longer. There have been some delays in terms of technical approval and final negotiations between ABC and their own shareholders in Tanzania,” said Mr Oigara.
Sources told Financial Standard that there were disagreements between London Stock Exchange-listed Atlas Mara – the majority shareholder – and the minority shareholder, the Tanzanian government, over the disposal of some of the assets.
Frustrated by the slow pace of the deal, which started in November last year, and given that the agreement had a stop-date that KCB refused to extend, the Nairobi Securities Exchange-listed lender decided to back out.
But this is not surprising. Over the last five years, there has not been any major merger and acquisition by a Kenyan company in Tanzania, according to Kunal Ajmera, the chief operating officer and international business centre director for Eastern Africa at Grant Thornton Kenya, an audit company.An increase in East African Breweries Ltd’s stake in Serengeti Breweries is the only notable deal in the recent past.“The only other deals that happened are by private equity firms. They just invest in Tanzania because they have to balance their portfolio,” said Mr Ajmera.Normally, when foreign money comes into the East Africa Community (EAC), private equity firms are expected to find deals across the trading bloc’s member states.The acquisition of BancABC would have pushed the profit contribution of KCB’s regional business closer to 20 per cent.The lender’s subsidiaries outside of Kenya contributed 14 per cent to profit before tax as at December last year. Balance sheet growth […]