This archive report was first published on 3 January 2020.
January 3, 2020, marked a significant turning point in the Kenyatta Family's plans to acquire Jamii Bora Bank, a Tier III lender in Kenya. The completion of the merger between Commercial Bank of Africa (CBA) and NIC Bank, owned by former Central Bank of Kenya Governor Philip Ndegwa's Family, has rendered the acquisition plans obsolete.
Before the merger took effect in September 2019, CBA had expressed serious interest in acquiring Jamii Bora. However, following the creation of the third-largest bank in the country by assets, interest in Jamii Bora has waned considerably.
NCBA Chief Executive John Gachora downplayed the acquisition plans, stating, "That was a pre-merger conversation with CBA, but at this point, I call it a good rumour as far as I know. It has not come up post-merger," according to a Business Daily report.
The acquisition plans were initially proposed in January 2019, with CBA offering a cash buy-out of Ksh 1.4 billion. However, this offer was a significant undervaluation of Jamii Bora's true worth, which was estimated to be around Ksh 3.4 billion as of the first quarter of 2018.
Analysts at Cytonn Investments Limited attributed the undervaluation to Jamii Bora's negative liquidity position, which was exacerbated by a bad loan ratio of 22.4% as of the first quarter of 2018. The lender's gross Non-Performing Loans (NPLs) stood at Ksh 2.2 billion during this period.
