Co-op Bank announces plan to acquire Jamii Bora Bank

Co-op Bank announces plan to acquire Jamii Bora Bank

 

Co-operative Bank of Kenya is at advanced stages to acquire troubled Jamii Bora Bank after its board of directors gave a green light to acquire the bank which has been struggling to keep a float in the banking industry.

The proposed acquisition which is subject to regulatory approvals if successful will lead to the acquisition of 100 percent shareholding of Jamii Bora Bank by Coop bank.

According to a statement from the bank, the acquisition will strengthen both institutions leveraging on their respective well established domestic and regional, corporate, public sector, retail business and the 15 million member co-operative movement.

Jamii Bora Bank is a Kenyan bank incorporated under the Companies Act with over 350, 000 customers in 17 branches and an asset base of Ksh 12.5 billion. The bank has a strategic niche in MSME banking and microfinance.

Co-op bank said the transaction is subject to successful completion of due diligence by the relevant professionals, board of directors and shareholders approval by both Co-operative Bank and Jamii Bora bank.

The acquisition is also subject to regulatory approval by Central Bank of Kenya, Capital Market Authority and Competition Authority of Kenya.

The transaction, if successfully concluded, may have a material effect on the price of the company’s securities. “Shareholders and the investing public are advised to exercise caution when dealing with the company’s securities,” warned the bank.

Acknowledging the proposed acquisition, Central Bank of Kenya said it welcomes the transaction which will diversify the business models of the two institutions and enhance the stability of the Kenyan banking sector.

“The Central Bank of Kenya has been advised by both Co-operative Bank of Kenya Limited and Jamii Bora Bank (JBB) of co-ops interest in acquiring JBB,” said a statement from CBK.

Jamii Bora Bank was founded by Ingrid Munroe as microfinance Non-Governmental Organisation to support poor families in slum areas.

Under Munroe the microfinance grew first and solidly and acquired City Finance bank and therefore transformed into a bank and relocated its headquarters to Koinange street.

The bank was ranked 38 out of 39 banks in terms of market share as at December 31, 2019 with a market share of 0.12 percent with 17 branches across the country.

However at some point some investment group such as Baraka Fund got on board and messed its direction.

The bank started going on a down ward spiral a few years later when investors got on board, the current National Security Exchange chairman, Sam Kimani acquired majority shares becoming the CEO of the bank and led it through a series of mistakes such as acquisition of shares in Uchumi and other firms that were on brink of collapse.

Some of the costly mistakes that continue to haunt JBB are loans given under the leadership of Sam Kimani to Uchumi where he is also the biggest shareholder. And other big loans advanced to white elephant real estate projects in Kisaju.

Under the leadership of Kimani, the bank started on a loss making trip and was always short on capital leading to disposal of its assets such as Jamii Bora House on Koinange street.

 

Until recently, JBB was one of Kenya’s fastest growing banks which had strategically positioned itself as an enterprise bank in a bid to focus on small and medium enterprises.

However due to poor leadership, the bank fell short of achieving its vision of becoming one of Kenya’s middle tier banks and a Pan African micro financier.

The acquisition by Coop bank therefore marks the return of Jamii Bora to its original fold of banking for the low end market.

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