The Lake Region Economic bloc comprised of 14 counties has received approval from Treasury to acquire government-owned Consolidated Bank. Negotiations to buy the Bank have been ongoing since April 2018.
The Lake region counties – Kisumu, Kakamega, Kisii, Nandi, Bomet, Kericho, Migori, Trans Nzoia, Homabay, Siaya, Nyamira, Busia, Bungoma, and Vihiga – have agreed to acquire Consolidated Bank to help them in their development agendas.
LREB’s chief executive Abala Wanga said, “..a development bank is designed to provide medium and long-term capital for productive investment, for example, infrastructure projects or industrial projects.”
The counties will contribute Ksh200 million each toward the project which cost Ksh2.8 billion. Mr Wanga said that acquiring the Bank was one of five key pillars for the region as it will enable them acquire long-term financing, which was unavailable from commercial banks due to the high risk associated with such projects.
Kenya is in the process of forming regional economic blocs which are meant to spur economic growth in the country. The proposed regional blocs are; Jumuiya ya Kaunti za Pwani, Frontier Counties Development Council, Narok-Kajiado Economic Bloc, Central Kenya Economic Bloc, North Rift Economic Bloc, South East Kenya Economic Bloc and the Lake Region Economic Bloc.
Consolidated Bank joins a list of Kenyan Banks that have been acquired by other banks or non-bank institutions in recent months. In 2018, analysts predicted that more Kenyan banks would merge due to the newly established capital requirements.
Some of the transactions that have been completed or are in the process include; Chase Bankacquisition by SBM Group in 2018, Prime Bank stake acquisition by Catalyst Principal Partnersand Africinvestment, CBA Group’s ongoing talks to merge with NIC Bank, Habib Bank acquisition by DTB IN 2017 and Giro Bank acquisition by I&M.
Reported by Kenyan Wallstreet