SBM of Mauritius Bids for Second Kenyan Bank in Expansion Drive

PORT LOUIS (Capital Markets in Africa) – SBM Holdings Ltd., Mauritius’s second-biggest lender, offered to buy its second Kenyan bank in less than six months in a deal that will enable it to compete for a place among the nation’s top 10 financial institutions.

The Port Louis-based bank submitted a non-binding offer for some of Chase Bank Kenya Ltd.’s assets and liabilities, the Central Bank of Kenya said in an emailed statement on Monday. Once acquired, SBM said it will merge them with Fidelity Commercial Bank Ltd., which it acquired in May this year and renamed SBM Bank Kenya Ltd.

“That will take us from number 31 to a top tier-two bank, anything between number 11 to 13,” SBM Advisor to the Board of Directors & Group Lead Executive Moses Harding said in a phone interview.
SBM Holdings is acquiring foreign banks as it targets a 30 percent increase in profit and seeks to increase total assets by a quarter this year, Chairman Kee Chong Li Kwong Wing said in April. In addition to the Mauritian government-owned bank’s purchase of Fidelity in Kenya, it’s expanding its presence on the Indian Ocean islands of Madagascar and Seychelles, and in India.

There have been seven acquisitions in Kenya’s banking industry since 2015, according to Nairobi-based Cytonn Investments Management Ltd., and more purchases are expected after the central bank in March lifted a two-year moratorium on licensing new banks. Acquisitions of Kenyan banks are being done at cheaper valuations because of declining net interest income and growing non-performing loans, Cytonn said in a report last month.

Chase Bank was placed in receivership in April 2016 after a run on deposits triggered by what the central bank described as “inaccurate” social-media reports and the departure of two of its directors. The central bank in June shortlisted SBM, along with Paris-based Societe Generale SA, to bid for Chase.

Source: Bloomberg Business News