Nigerian lender to take over Transnational Bank after CBK approval


Nigerian lender to take over Transnational Bank after CBK approval
Transnational Bank Limited branch in Elgeyo Marakwet PHOTO | COURTESY

In Summary

  • Access, is expected to close out the amalgamation of the bank on February 1 with the CBK terming the transaction as strength in the building of resilience in Kenya’s banking sector.
  • The final beam of green lights to the deal serves to lift the mid-tiered lender into a stronger financial footing having slumped into a slumber of stagnant earnings growth in recent years.
  • The entry Nigeria’s largest lender in Access bank by assets is expected to stir up the race to the first Pan-African bank as local outfits KCB and Equity remain locked in the battle to grow assets beyond the Ksh.1 trillion mark.

The Central Bank of Kenya (CBK) has okayed the 100 percent acquisition of the Transnational bank by Nigeria’s top lender Access bank.

The reserve bank confirmed the approval via a gazette notice issued on January 17 paving way for the entry of the third Nigerian lender into the domestic market after the United Bank of Africa (UBA) and the Guaranty Bank (GT).

Access, is expected to close out the amalgamation of the bank on February 1 with the CBK terming the transaction as strength in the building of resilience in Kenya’s banking sector.

The acquisition was first announced at the end of October 2019 as the Competition Authority of Kenya (CBK) disclosed the issuance of a binding share purchase agreement to both Transnational and Access bank shareholders.

The final beam of green lights to the deal serves to lift the mid-tiered lender into a stronger financial footing having slumped into a slumber of stagnant earnings growth in recent years.

With a balance sheet of Ksh.10.24 billion, Transnational bank struggled to grow both their customer deposits and loans as material concerns germinated around the lender’s liquidity profile.

According to data contained in the lender’s 2018 annual report, the Kenyan outfit retained its balance sheet at Ksh.10.24 billion as growth in both loans and customer deposits to December 31, 2018 remained stuck below the sector’s aggregates.

In the period, the bank reported a Ksh.71.8 million net loss from a much improved Ksh.36.4 million profit in 2017.

Incorporated in 1985, Transnational bank has 28 operational branches, 241 employees and 97,000 customers with the majority of banking outlets lying in the North Rift including Iten, Kitale, Bomet and Nandi.

Further, the bank is linked to former President Daniel Moi political aides including Joshua Kulei and Simeon Nyachae with the Archers and Wilcock Limited holding the controlling 23.8 percent stake

First Pan-African Bank

The entry of Access Bank, Nigeria’s largest lender by assets is expected to stir up the race to the first Pan-African bank as local outfits KCB and Equity remain locked in the battle to grow assets beyond the Ksh.1 trillion mark.

Access Bank has continued to pursue a further stretch to its already expansive footprint on the continent which comprises of 480 branches, 31 million customers and presence in the Democratic Republic of Congo (DRC), the Gambia, Rwanda, Zambia, Sierra Leone and the United Kingdom.

The bank further has representative offices in China, the United Arab Emirates (UAE), Lebanon and India.

In 2018, the bank reported a 58 percent jump in profit to Ksh.26.6 billion (94.9 billion Naira) and had assets totalling to Ksh.1.4 trillion (5 trillion Naira).

Domestically, KCB has acquired the National Bank of Kenya (NBK) in its quest of growing its balance sheet beyond the Ksh.1 trillion mark while Equity has followed Access Bank’s trail of expansion through subsidiaries lining up deals for Atlas Mara and the control of the Bank of Congo.

KCB and Equity asset base stood at Ksh.714.3 billion and Ksh.524.5 billion respectively by the end of December 2018.

Access Bank is set to inherit assets estimated Ksh.10.2 billion (36.4 billion Naira), a sum dwarfed by its astronomical scale of net asset valuation.

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Story By Kepha Muiruri
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