Co-operative Bank in Talks to Acquire Jamii Bora Bank

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Co-operative Bank of Kenya Ltd has announced plans to acquire 100 percent shareholding in Jamii Bora Bank. A move that will see its asset base strengthened to over KSh462 billion.

The transaction is subject to the successful completion of due diligence by the relevant professional bodies, approval by the Board of Directors and Shareholders of both Co-operative Bank of Kenya Limited and Jamii Bora Bank.

It is also subject to approvals by the Central Bank of Kenya, Capital Markets Authority and Competition Authority of Kenya.

­“The acquisition will strengthen both institutions leveraging on their respective well established domestic and regional corporate public sector, retail business and the 15 million-member co-operative movement,” Co-op Bank said in a notice.

Co-op commenced operations in 1965 and is predominantly owned by the 15 million-member Kenyan co-operative movement. 

It was listed on the Nairobi Securities Exchange in 2008. It was ranked 4 out of 39 banks in terms of market share as at December 31, 2019 with a market share of 9.63 percent with 159 branches in Kenya and South Sudan.

JBB was established in 2010 after the acquisition by City Finance Bank Limited of the business of Jamii Bora Kenya Limited, a Micro Finance Institution. 

It was ranked 38 out of 39 banks in terms of market share as at December 31, 2019 with a market share of 0.12 percent with 17 branches across the country.

Co-operative Bank continues to leverage on the “Soaring Eagle” Transformation Agenda that has re-tooled and equipped the business with added competitive edge as reflected in the sustained growth in market share across all market segments and counties.

This has deepened their Financial Inclusion model rooted in the over 15 million-member co-operative movement. It has continued with a strategy for continued deepening and dominance in our domain market segment leveraging of the Micro, Medium and Small Enterprises and the Saccos, while reviewing opportunities to grow alternative income streams from other services like Bancassurance, and Leasing business being done through Co-op Bank Fleet Africa Leasing Ltd, a joint venture with Super Group of South Africa.

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AIB Capital Limited, a stock trading company, in a commentary says, Jamii Bora’s market share stands at 0.21% and this is unlikely to have a material impact on Co-operative Bank. However, they are concerned about JBB asset quality.

“In 2018, the NPL ratio stood at 69%. Some of JBB’s unprofitable investments include Ksh 412 million loans to Kenya Airways (was sold to NIC in 2019) and Ksh 500 million in Uchumi (has a 15.8% shareholding in Uchumi), We don’t think the acquisition will add much to Coop’s balance sheet.”

“JBB also has a leasing business; this may help Coop grow its leasing business. Early last year, it was reported that CBA was interested in purchasing the bank for Ksh 1.4 billion. We expect Coop to offer a similar amount.”