KCB's bid to acquire Tanzanian bank flops on regulatory delays
A bid by KCB Bank to acquire a Tanzanian lender has flopped, dealing it a major blow in the battle for leadership of the regional banking market.
In a statement yesterday, the listed lender announced that it had put off plans to acquire African Banking Corporation Tanzania (BancABC Tanzania) following what it said were regulatory delays by the Tanzanian authorities.
“As of the date hereof, certain regulatory approvals have not been received within the prescribed timeframe specified in the agreement,” said KCB in a public announcement in the local papers.
“As a result, without further agreement by the parties to extend the long-stop date, the agreement has been terminated and, accordingly, the parties will not proceed to complete the transactions as previously envisaged.”
However, in an earlier interview with The Standard, KCB Group Chief Executive Joshua Oigara had hinted that the reason for the delay in 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.
While releasing its results for the third quarter of this year, KCB announced that it was at the tail end of acquiring a majority stake in BancABC Tanzania, which is owned by London-listed Atlas Mara.
KCB had completed the acquisition of another of Atlas Mara’s banks in Rwanda, Banque Populaire du Rwanda, which saw its assets grow by 15 per cent to Sh1.12 trillion in September 2021 compared to Sh972 billion in the same period last year.
In November 2020, KCB entered into an agreement with Atlas Mara for the acquisition of 97 per cent stake in BancABC Tanzania and the entire of Banque Populaire du Rwanda.
This was barely weeks after Equity Bank pulled out of taking up the banks, in what the Kenyan lender attributed to “lack of mutually acceptable commercial terms.”
KCB yesterday said it will still scout for other acquisitions in the region.
“Despite the above, KCB will continue exploring and pursuing attractive regional expansion opportunities in order to enhance our regional participation, accelerate our growth and maintain sustainable long term success in line with our expansion and growth strategy,” said the statement signed by Group Company Secretary Bonnie Okumu.
KCB and Equity are locked in a fierce battle for control of the region’s banking space, which the latter leads with a balance sheet of Sh1.2 trillion as of September 2021.