Access Bank, Nigeria’s largest lender, will purchase a majority stake in Sidian Bank from Centum Investments for Sh4.3 billion, two years after entering the Kenyan market with the acquisition of Transnational Bank.
Centum Investments announced on Tuesday a binding agreement to sell an 83.4 percent stake in Sidian to the Nigerian lender, which has been on an African acquisition spree.
The transaction is the latest in Kenya’s banking sector, where tougher central bank supervision and the proliferation of lenders have sparked a consolidation round since 2017.
“Centum Investment Company Plc (‘Centum’) announces today that it has entered into a binding agreement with Access Bank Plc (‘Access Bank’) regarding a proposed purchase by Access Bank of Centum’s entire equity stake in Sidian Bank Limited,” Centum’s CEO, James Mworia, said in a statement to newsrooms.
“It is expected that in due course, Sidian will be merged with Access Bank’s subsidiary in Kenya to create a stronger banking institution positioned to serve the Kenyan market,” he said.
Recently, the Nigerian lender completed several African acquisitions, including the acquisition of South Africa’s Grobank and the loss-making Cavmont Bank from the Zambian arm of Namibian financial services group Capricorn.
It became Nigeria’s largest lender last year after acquiring rival Diamond Bank in a $235 million deal that it claimed would create Africa’s largest bank by customers.
Centum’s exit from Kenya’s lucrative financial services market follows the acquisition of a majority stake in then-K-Rep Bank by Access in 2014.
Sidian made Sh117 million in profit in the three months to March, up from Sh113.9 million in the previous quarter.
Nigerian lenders have been looking for new ways to expand after slow economic growth at home following a 2016 recession caused loans to soured, leaving banks with cash in government bonds whose yields have now declined.
The CBK previously stated that it expects consolidation in the Kenyan industry to continue, adding that market-driven tie-ups were working.
The all-share acquisition of National Bank of Kenya by KCB Group in 2019 has been billed as one of the largest deals in Kenyan history.
The merger of Sidian and Access Bank Kenya operations will result in a lender with Sh57.1 billion in assets, making it the largest tier-three lender with a loan book of Sh26.6 billion.
