SBM to proceed with acquisition of Kenya's Fidelity Commercial Bank
Mauritian bank group SBM Holdings will acquire full ownership of Kenya's Fidelity Bank, a small lender, in a deal valued at 100 shillings (Rs 35.14), SBM said on Tuesday.
SBM said in a filing with the Mauritian bourse that it would inject 1.45 billion shillings (Rs 510 million) of fresh capital into Fidelity, once the deal gets all the required regulatory approval.
"The acquisition is in line with SBMH's regional expansion strategy into East Africa," SBM said in the filing.
The Kenyan central bank said the deal was expected to be completed by the end of this year.
"SBM Group will bring its experience and expertise from Mauritius and other markets, to enhance competitiveness and the resilience of Kenya's banking sector," the central bank said.
Fidelity, which started operating as a commercial bank 20 years ago, has 14 branches in Kenya and is ranked 31 out of 41 Kenyan lenders by market share, with 0.39 percent, the central bank said.
SBM Group, which operates one of the Indian Ocean island nation's leading commercial banks, SBM Bank, had assets of $4.2 billion (Rs 147 billion) as of September. It also operates in India and Madagascar.
Analysts say rising bad debts, the capping of commercial lending rates and weaknesses in corporate governance exposed by the collapse of two lenders in the past year and a half, have made the Kenyan banking sector ripe for consolidation.
"CBK (Central Bank of Kenya) welcomes the interest of foreign banks that will contribute to the emergence of a world-class financial sector," the central bank said.