A Tanzanian bank will become the first to enter the Kenyan
market after Kenya's central bank approved the purchase by M Holdings, which
operates as Bank M, of a 51 percent stake in Oriental Commercial Bank.
Kenya is trying to consolidate its lenders after three bank
failures over a period of nine months exposed weaknesses in a sector that had
been growing robustly for years.
"Bank M is the first bank from Tanzania to enter the
Kenyan banking sector. Its entry into the Kenyan market strengthens the ongoing
East African Community (EAC) integration," the Kenyan central bank said in
a statement on Thursday.
While some Kenyan lenders have spread their wings around the
region over the years, their counterparts from the six-nation EAC have not
started operations in Kenya.
The central bank, which did not disclose the value of the
deal, said the new entity will be named M Oriental Commercial Bank Limited and
the acquisition will be completed in September.
Kenya has a large banking sector, with Oriental ranked 37
out of 42 banks by market share, with nine branches.
The consolidation of Kenyan banks began after Dubai Kenya, a
small bank, was put into receivership by the central bank in August after it
failed to meet its obligations.
This was followed by the closure of mid-sized Imperial Bank
in October due to fraud and in April another mid-sized lender Chase Bank was
closed temporarily after its auditors gave a qualified opinion on its earnings,
sparking a run on deposits.
As at the end of March, Bank M had 889.11 billion shillings
($406 million) in assets. It is owned by several shareholders, with the largest
listed as Sanjeev Kumar on its website.
Source: Reuters
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