The Competition Authority of Kenya has approved the planned merger between NIC and CBA banks on the condition that the two lenders do not terminate the employment of approximately 1,872 local staff for a duration of one year after the fusion of the entities.
“The authority has approved the proposed merger between Commercial Bank of Africa Ltd and NIC Group Plc on condition that none of the employees of the merged entity is declared redundant within 12 months of closing the transaction in Kenya,” said Competition Authority of Kenya Director-General Wang’ombe Kariuki in a statement.
According to a news report by the Standard newspaper it is yet to be seen if the condition will apply to the lenders’ regional subsidiaries which have a joint labour force of approximately 2,360 staff.
The unit formed from the merger between the two lenders will become the country’s second largest bank in terms of market share with a 10.67 per cent stake in Kenya’s financial market. Despite the aforementioned the watchdog’s Director General was adamant that the entity would still face competition from Tier 1 banks who collectively own 55.32 per cent of market share.
As of December 2017, out of the collective 55.32 per cent market share owned by Tier 1 banks, KCB controlled 14.14 per cent market share followed by Co-operative Bank of Kenya with 9.93 per cent. Equity Bank, Standard Chartered Bank, Diamond Trust Bank and Barclays Bank held a market share of 9.85 per cent, 7.11 per cent, 6.72 per cent and 6.57 per cent respectively in the period under review.
The decree by the industry watchdog will come as a relief to staff following a wave of contract terminations by various lenders in the country in an effort to cut down on costs as a result of the introduction of the rate cap law.
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