According to reports one of Nigeria’s major multinational commercial banks; Access Bank, will be acquiring a majority stake in Sidian Bank from East Africa’s leading investment company; Centum Investments for a price tag of an impressive 4.3 billion Kenyan Shillings. The deal is taking place just two (2) years after Access Bank entered the Kenyan banking sector through its acquisition of Transnational Bank.
On the 7th of June 2022 Centum Investments announced that it had reached a binding agreement to sell 83.4 percent of its stake in Sidian bank, to Access Bank which has been on an impressive acquisition run across Africa.
The deal between Access Bank and Centum Investment is one of the most recent which have occurred in the banking industry in Kenya which has undergone a much more strict overseeing from the Central Bank of Kenya (CBK) alongside an increase in the number of lenders operating in the country. It is believed that the increase is what led to the current set of consolidations which kicked off in 2017.
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In 2020, Access Bank bought a 99.98 percent stake in Transnational Bank from associates who were close to former President Daniel Moi. The deal was reportedly worth 1.56 billion Kenyan Shillings.
It is expected that Access Bank which places a main focus on corporate retail banking, will be able to further Sidian Bank’s growth. It is believed that Sidian Bank will be combined with Transnational Bank which has already been renamed to Access Kenya.
Access Bank’s total assets are valued at 25.5 billion United States Dollars which is around 2.99 trillion Kenyan Shillings.
Sidian began as a Non-Government Organization (NGO) and then eventually became a micro finance institution in 1989. It then completed the transition into being a bank in 1999. Sidian Bank mostly provides loans to Small and Medium sized Enterprises (SMEs).
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The Chief Executive Officer (CEO) of Centum Investment; James Mworia made it known that via a statement issued that, “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.”
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The Centum Investments Chief Executive Officer (CEO) added that, “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.”
In recent times, Access Bank has completed a number of buyout deals across Africa. In South Africa, it bought Grobank and in Zambia, it achieved the acquisition of Cavmont Bank which is the Zambian arm of Capricorn, a financial services group.
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In 2021, Access Bank became Nigeria’s largest commercial bank after acquiring one of its competitors; Diamond Bank in a deal that was worth 235 million United States Dollars (USD) which is around 27.55 billion in Kenyan Shillings. Access Bank revealed that its acquisition of Diamond Bank was done so as to build Africa’s largest bank by customers.
The acquisition of Sidian Bank by Access Bank signifies Centum Investment’s departure from the financial services industry in Kenya. It first entered in 2014 when it purchased a majority stake in K-Rep Bank.
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In the three (3) months leading to March of 2022 Sidian Bank experienced a profit of 117 million Kenyan Shillings. This is higher than the 113.9 million Kenyan Shillings that was the case in quarter prior.
The commercial bank which is licensed by the Central Bank of Kenya (CBK) was however unable to create the revenue, dividends and ultimately profits that Centum Investment was expecting.
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According to the Central Bank of Kenya (CBK) Sidian Bank enjoys a rank of 23rd out of a total of 39 in Kenya. It has also become tier-three bank after becoming a fully fledged bank almost ten (10) years ago.
According to Centum Investment its initial investment into Sidian Bank was 4.7 billion Kenyan Shillings. This means that the investment company which is listed on the Nairobi Securities Exchange (NSE), was unable to make any capital gains from Sidian Bank’s shares since its sale to Access Bank is valued at 4.3 billion Kenyan Shillings.
Access Bank is currently operating in twelve (12) countries on the African continent along with operations in Britain and representative offices in India, the United Arab Emirates (UAE), Lebanon, and China.
Banks in Nigeria have reportedly been looking to utilize new ways to achieve growth on the home front after the recession in 2016 which resulted in numerous loan defaults. Though the banks had to resort to putting their funds into government bonds the yields were sadly, declined.
The Central Bank of Kenya (CBK) revealed that it expects the consolidation or mergers to continue to occur making it known that they are producing results.
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For instance, KCB Group’s all share acquisition of National Bank of Kenya in 2019 has been named by industry observers as one of the largest deals in the country’s finance sector.
Access Bank Kenya and Sidian Bank’s efforts together, will set up a bank with assets worth 57.1 billion Kenyan Shillings. This will mean it will be the biggest Tier Three (3) bank in Kenya, with a loan book of 26.6 billion Kenyan Shillings.
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