Finance

DRC: Kenya’s KCB announces definitive agreement for majority investment in TMB

Wednesday, 03 August 2022 15:46
DRC: Kenya’s KCB announces definitive agreement for majority investment in TMB

(Ecofin Agency) - The agreement marks the beginning of a plan unveiled by KCB Group in May 2019 disclosing its ambition to expand into the Congolese banking market. If the acquisition deal is finalized, KCB will be the second Kenyan bank to enter the DRC banking market. 

Last Tuesday (August 2), Kenya-domiciled financial services group KCB Group Plc announced a definitive agreement to acquire an 85% stake in Trust Merchant Bank, a commercial bank based in the Democratic Republic of Congo. In the release announcing the agreement, KCB indicated that it would acquire the remaining 15% stake within two years. 

For KCB Group chairman Andrew Wambari Kairo, becoming a majority shareholder in Trust Merchant Bank gives his group “strong headroom to accelerate our growth ambitions to deliver better value for [...] shareholders.” It is part of the group’s “ongoing strategy to tap into opportunities for new growth while investing in and maximizing returns from the Group’s existing businesses,” he explained.

KCB plans to pay cash for each of the shares acquired based on net asset value as of the transaction closing date.

 If the sale agreement is approved by the relevant regulatory authorities, Trust Merchant Bank will become KCB Group's first banking subsidiary in the DRC. The Central African country will also become the Kenyan group's eighth largest operating market in sub-Saharan Africa after Kenya, Tanzania, South Sudan, Uganda, Rwanda, Burundi, and Ethiopia.

The definitive agreement is announced three years after former KCB Group CEO Joshua Oigara made it clear ( in May 2019) that the group was considering several bank acquisitions in DRC and Rwanda. If successful, the deal will make KCB Group the second Kenyan banking group to enter the DRC banking market.  

Indeed, in July 2020, Equity Group Holdings Plc strengthened its position in the DRC banking market with the acquisition of Banque Commerciale du Congo (BCDC) in July 2020. In late 2020, BCDC was merged with Equity Group’s local subsidiary, creating Equity BCDC, DRC’s second-largest bank with a total balance of US$2.5 billion.

As of June 30, 2021, the Congolese financial sector was composed of 250 players, including 15 commercial banks, 71 savings and credit cooperatives, 21 microfinance institutions, and 10 insurance companies. Four of the 15 commercial banks operating in the country are owned by locals.  

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