Stanbic merger talks spark NCBA share price rally

Stanbic merger talks spark NCBA share price rally

NCBA

NCBA Group Managing Director and CEO John Gachora. Bloomberg reports that NCBA-Stanbic Holdings merger is part of Standard Bank Group push to enhance its presence in East Africa amid increasing competition in Kenya's banking industry and sector consolidation.

The shares of NCBA Group surged by nearly 10 percent on Tuesday following reports that the regional lender is in merger talks with rival, Stanbic Holdings. 

NSE data shows that NCBA shares recorded 9.71 percent gain in value to close trading at KES76.25 at the Nairobi Securities Exchange (NSE), effectively boosting the bank's value to approximately KES114 billion. 

During the trading session, NCBA saw roughly over 256,000 shares traded. Over the past year, NCBA share price has experienced 73 percent increase in value.

According to market analysts, Stanbic is expected to pay a premium to acquire rival NCBA Group, and, therefore, investors are positioning themselves for a gain in anticipation of the merger.

Earlier, Bloomberg reported that Stanbic Holdings, which is a subsidiary of South Africa-based Standard Bank Group is in negotiations with NCBA Group, potentially to establish a financial services entity with just over KES1.1 billion in assets.

The merger is part of the South Africa-based institution to enhance its presence in East Africa's economic crown jewel amid increasing competition in Kenya's banking industry and sector consolidation. 

"The continents biggest bank by assets holds a 75 percent stake in Nairobi-based Stanbic Holdings Plc, which has received internal approvals for the talks with NCBA, according to some people, who asked not to be identified as the information is still private," Bloomberg reported, adding: "CEOs from the two Kenyan banks--Joshua Oigara at Stanbic and John Gachora at NCBA--didn't respond to emails seeking comment."

If the merger turns successful, the new financial services heavyweight is expected to have a combined assed base pf KES1.1 billion, effectively establishing itself as the third largest lender behind Equity Group Holdings and KCB Group.

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