KCB Group c*mpletes acquisition of DRC’s Trust Merchant Bank

Friday, December 16th, 2022 06:00 | By
KCB bank PHOTO/Courtesy

KCB Group has completed the acquisition of Trust Merchant Bank (TMB) after receiving various regulatory approvals to have a controlling stake of 85 per cent in the Democratic Republic of Congo (DRC) based lender.

The group announced that it had obtained the regulatory greenlight in Kenya, DRC, and Comesa Competition Commission, thus completing the transaction process which has been ongoing for several months now.

New markets

In August, the group’s shareholders approved the acquisition after it announced entering into a definitive agreement with the shareholders of TMB. The transaction is expected to boost the lender’s regional scale-up into new markets as part of plans to increase its revenues.

“Combining our common legacies and our complementary footprints will strengthen our ability to serve our communities and regional customers and provide solutions that make a difference in people’s lives. The acquisition extends our reach by providing customers access to a larger banking network and an expanded array of services,” KCB Group CEO Paul Russo (pictured) said in a statement.

TMB acquisition is part of KCB’s ongoing strategy to expand its regional participation, accelerate growth and maintain sustainable long-term regional success while investing in and maximizing the returns from its existing businesses.

TMB, which also has an insurance subsidiary Afrissur SA, will give the Kenyan lender upper hand in supporting the insurance sector. It is one of DRC’s largest banks with $1.7 billion (Sh207.4 billion) total assets and more than 109 branches across the country.

KCB Group will operate TMB with its current brand while enhancing the current business operating model. The transaction, whose value has not been disclosed, has been made with a cash payment for the shares based on TMB’s net asset value at the date of closing the deal.

A multiplication factor of 1.49 has also been included in the final agreement signed between the two groups. This acquisition marks KCB’s seventh market outside Kenya, having merged with Rwanda’s second-largest bank, Banque Populaire Du Rwanda (BPR), last year.

KCB now has a presence in eight countries including Kenya, Tanzania, Uganda, Rwanda, South Sudan, Burundi and DRC. It also runs a representative office in Ethiopia.

KCB entry into DRC will unlock fresh competition with its home rival, Equity Group, which in 2020 purchased a 66.5 percent stake in Banque Commerciale Du Congo (BCDC). This Sh10.3 billion cash transaction by Equity made it the second-largest lender in DRC.

KCB will now become the third largest bank in DRC, trailing only Rawbank and EquityBCDC.

Kenyan commercial banks are looking beyond their borders for acquisitions, seeking to tap opportunities in the rest of Africa which are driven by rapid economic growth and trade integration.

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