This archive report was first published on 28 October 2019.
On October 28, 2019, the Competition Authority of Kenya (CAK) and Central Bank of Kenya (CBK) gave the green light to Access Bank's proposal to acquire a controlling equity stake of 93.57% in Transnational Bank Ltd., a Kenyan-based lender.
Access Bank, Nigeria's largest bank, has grown significantly following the merger of operations with Diamond Bank of Nigeria. Diamond Bank transferred all its assets, liabilities, and undertakings to Access Bank.
Transnational Bank, established in 1984 as a non-financial institution, has grown to become a Tier 4 bank focusing on the agricultural sector. In 2018, the bank reported a full-year pretax loss of Ksh 98.5 million, with non-performing loans (NPLs) increasing by 58% to Ksh1.85 billion while loans rose 0.5% to Ksh 6.663 billion.
Access Bank's acquisition of Transnational Bank is part of its Pan African expansion ambitions, with Kenya serving as a regional hub. The bank's proposal for the acquisition received approval from the Central Bank of Nigeria.
Consolidation in the Banking Sector ¶
The Kenyan banking industry has been witnessing consolidation, which CBK believes will leave well-capitalized players that will be able to catalyze economic growth.
CBK notes that consolidation improves resilience to capital shocks and lowers compliance costs. Kenya has more banks per person than South Africa and Nigeria, Africa's two largest economies, with 40 lenders and a population of more than 50 million.
