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How Beneficial Is Bank Consolidation?—Spotlight on Kenya, Africa

Kenya, Africa

By Osei AgyemangPublished 5 years ago 4 min read
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Years ago I did not understand why good standing and independent banks eventually joined other financial institutions or banks. After a series of interviews with swayful financial advisors for the reasons, I was convinced. At the moment, the largest African bank, in terms of customer base, is in the news. The bank will be available to the public in the third quarter of 2019. It will soon be forthcoming because two Kenyan banks recently joined. The Kenya NIC Bank Plc (together with the parent company NIC Bank Group) and the African Commercial Bank are now consolidating. Regional supervisory authorities approved the merger. Kenya Central Bank and the Bank of Tanzania announced this on 30 May 2019.

Other financial controllers in Kenya, including capital and competition authorities, also confirmed the consolidation. What else is left? It is sealed and done. The two bodies allowed the merged entity to start trading on the Nairobi Securities Exchange on July 17, 2019. Africa has struggled against unemployment for years, so consolidating this is a good opportunity for joint institutions to pick a point to help recruit up to 2,360. The latest figures are given by the NIC Bank Group in Kenya and the African Commercial Bank. At the very least, they will join more than 40 Kenyan banks, which together helped in reducing unemployment rate in just three years before December 2017 and 2018.

Obviously, with this, the bank's customer base will increase. It will serve 40 million customers and operate in a network of more than 100 branches in two time zones in five regional economic centers. The NIC Kenya Banking Group plans to expand its market presence with new branches and a new digital banking platform. The Commercial Bank of Africa, on the other hand, has equally shown their strength in corporate banking with the ability to provide large loans to clients. Both have what it takes to manage the banking sector not only in Kenya but also in Africa as a whole.

Because of their capacity, several global rankings have reposed confidence in the merge. It is likely that this will lead to higher revenues for new companies due to increased personnel and industry and lower financing costs. In addition, both creditors will be able to provide sufficient capital for strategic growth initiatives and be more effective in digital expansion with a strong capital base. All of these expectations will only be met if the bank effectively counteracts the high integration risks that are generated. Customer retention during the transition process, merging financial systems and operations and infrastructure must be seriously considered. That's not all. It is hoped that the functions of technology, management and maintenance of the company will be reviewed to reduce costs and improve efficiency.

For all, NIC Bank Group shareholders will also have 47 percent of merged entities and Commercial Bank of Africa shareholders will have 53 percent, which is the first major merger in the industry since the Kenyan government in 2016 limited commercial interest rates. Meanwhile, in Ghana, West Africa, five banks were in the same situation a few months ago. These banks, namely: Sovereign Bank, Royal Bank, The Beige Bank, Construction Bank and Unibank were forced to join and are now called Consolidated Bank of Ghana Ltd.

The Banks were placed under one management after controversies regarding their financial situation popped up. Fortunately, after the merger it has been a great turn around and the new administration has been very solid. In general, mergers are very beneficial for both clients and the bank. Customers are now 100 percent safe as the recapitalizing united bank has resulted in an increase in Ghana's economy. Experts call this step "timely." Back to the incipient subject. With the merger of the NIC Group and African Commercial Bank, they can meet all the challenges faced by local banks since the beginning of the interest rate limitation in September 2016.

According to my check, Kenyan President Uhuru Kenyatta and his family, who are generally recognized as the richest in East and Central Africa, will control about 13.2 percent of the new amalgamated bank. Several other investors, including billionaires and politicians, have expressed interest in the new company and promised to invest in the bank. The new bank will have a new brand name that will reflect the identity, values​and aspirations of the newly joined entities.

About the Author 🇬🇭

Osei Agyemang is a passionate and creative content writer / editor who is an expert in writing interesting and innovative contents. Osei is also an addicted travel enthusiast who likes to visit and tell the stories of interesting places around the world. He is an award winning National Artist who studied Psychology, Journalism and Global English Language at University of Strathclyde and the University of Glasgow respectively.

Email: [email protected]

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About the Creator

Osei Agyemang

https://www.oseiagyemang.com:

A passionate writer who creates exciting and innovative contents. Osei Agyemang is also a tourism fan who loves to travel around the world. He has studied Psychology and Journalism.



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