Centum sells Sidian Bank for 4.3 billion shillings to Nigerians


Centum sells Sidian Bank for 4.3 billion shillings to Nigerians

Chege Thumbi, Managing Director of Sidian Bank, during an interview in Nairobi on March 26, 2018. PHOTO | NMG

Leading Nigerian lender, Access Bank, will acquire a majority stake in Sidian Bank from Centum Investments for 4.3 billion shillings, two years after entering the Kenyan market with the takeover of Transnational Bank.

Centum Investments on Tuesday announced a binding agreement to sell 83.4% of Sidian’s capital to the Nigerian lender, which has made a wave of acquisitions in Africa.

The deal is the latest in Kenya’s banking sector, where tighter central bank supervision and the proliferation of lenders have sparked a consolidation cycle in the sector since 2017.

Access Bank acquired a 99.98% stake in Transnational Bank in 2020 from close associates of former chairman Daniel Moi in a deal valued at 1.56 billion shillings. Access, which has assets of $25.5 billion, is focused on corporate retail banking and is expected to drive the growth of Sidian, which will be merged with Transnational Bank which has been rebranded Access Kenya.

Sidian, which started as a non-governmental organization before transforming into a micro-financier in 1989, then a bank in 1999, lends mainly to small and medium-sized enterprises (SMEs).

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“Centum Investment Company Plc (“Centum”) today announces that it has entered into a binding agreement with Access Bank Plc (“Access Bank”) regarding a proposed purchase by Access Bank of Centum’s entire equity interest in Sidian Bank Limited,” the CEO of Centum said. , James Mworia, said in a statement to newsrooms.

“It is expected that in due course Sidian will merge with Access Bank’s subsidiary in Kenya to create a stronger banking institution positioned to serve the Kenyan market,” he said.

The Nigerian lender recently completed several takeover deals in Africa, including the acquisition of South African Grobank and loss-making Cavmont Bank from the Zambian branch of Namibian financial services group Capricorn.

He became Nigeria’s biggest lender last year, a status he achieved after acquiring rival Diamond Bank in a $235million deal he said was intended to create the largest bank in Africa by customers.

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Access’s acquisition of Sidian marks Centum’s exit from Kenya’s lucrative financial services market after buying the majority stake in K-Rep Bank in 2014.

Sidian posted a profit of 117 million shillings in the three months to March, compared to 113.9 million shillings in the previous quarter.

But the lender was unable to generate the outsized profits and dividends that Centum envisioned. The Central Bank of Kenya (CBK) ranks Sidian as the 23rd bank in Kenya out of 39 in the country, has remained a Tier 3 bank since becoming a fully fledged bank nearly a decade ago.

Centum places its initial investment in Sidian Bank at 4.7 billion shillings, meaning the Nairobi-listed investment company has not realized any capital gains on the lender’s share given its sale to Nigerians at 4.3 billion shillings.

Access is present in 12 African countries and in Great Britain, as well as representative offices in China, the United Arab Emirates, Lebanon and India.

Nigerian lenders have been trying to find new avenues of growth after sluggish economic growth in their country following a 2016 recession caused lending to deteriorate, leaving banks collateralizing cash in government bonds whose yields have now declined.

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The CBK said earlier that it expects Kenyan industry consolidation to continue, adding that market-driven tie-ups are working.

The 2019 acquisition of National Bank of Kenya by KCB Group has been touted as one of the biggest deals in the Kenyan sector.

The combined operations of Sidian and Access Bank Kenya will create a lender with assets of 57.1 billion shillings, making it the largest tier three lender with a loan portfolio of 26.6 billion shillings.

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Shawanda H. Saldana