Kenya has suspended the sale of National Bank, Consolidated Bank and Development Bank ahead of their planned merger.
“The next steps on privatisation of the banks are to be determined taking into account the decisions regarding the merger. Decision on what is to be privatised will be based on the review results,” Solomon Kitungu, the executive director of the country’s Privatisation Commission told The EastAfrican.
The country’s competition watchdog said it was aware of the plans to either merge or consolidate the three banks but the authority has not yet received formal application for review.
“The key thing is that they have not presented an application to us maybe they are still negotiating and carrying out due diligence work but it will depend on how they intend to do it. We have to know first if it is a merger because if the three banks are currently controlled by one person, either a natural person or a legal person, then it is not a merger but just a consolidation,” said Kariuki Wang’ombe, director general of the Competition Authority of Kenya (CAK).
But even as news of the merger of the three state banks reverberates through the investing fraternity, Kenya is also looking for a specialist to probe behaviour by commercial banks that is likely to undermine the rights of the consumers in terms of prices and quality of products and services. The consultant will assess the kind of information that the banks give to consumers of banking services and if that information is enough for making rational decisions.
“We are in the process of bringing in a consultant and we expect this study to be finalised in the first quarter of next year,” said Mr Wang’ombe.
The government, through the National Treasury, controls a 22.5 per cent shareholding (63 million shares) in National Bank while its state-owned National Social Security Fund holds 48.06 a per cent stake — 134.54 million shares.
In Consolidated Bank of Kenya Ltd (CBKL), the government owns owns 50.2 per cent through the Deposit Protection Fund, and has an 89.3 per cent shareholding in Development Bank of Kenya (DBK) through the Industrial and Commercial Development Corporation (ICDC).
“We are already looking for a consultant to carry out a review of the feasibility, possible options and modalities of merging the three banks,” said Mr Kitungu.
National Bank, CBKL and DBK had been lined up for privatisation as part of a broad parastatal reform programme intended to remove the state from ownership and management of non-strategic commercial enterprises.
The three banks have a combined core capital of Ksh13.17 billion ($125.44 million).
“The Commission is undertaking additional review work to inform the discussions on the merger and the next privatisation steps,” said Mr Kitungu.
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