I&M announced that they had signed an agreement to take over Giro Bank in a move that will increase their market share, making it the seventh largest lender in the country.
The statement from the bank immediately soared I&M’s shares in the stock market, jumping 12 percent to sh120. An acquisition of an already successful company breeds confidence in people who then show up this by buying more shares of that company when trading in the stock market.
The agreement to take over Giro Bank just awaits regulatory approval by the Capital Markets Authority (CMA) and the Competition Authority (CA), the Banking Act and I&M shareholders in general meeting
“The proposed acquisition, upon completion, envisages the immediate merger of Giro’s banking business into I&M Bank Limited (“I&M Bank”), IMHL’s flagship subsidiary,” read a statement from the bank.
Analysts had expected commercial banks to merge and other acquired over the proposal by Treasury to increase core capital from sh1B to sh5B. The proposal made in the budget statement in June this year was however vetoed by MPs who argued that it will dent Kenya’s ability to enjoy the diversity they now get from different banks.
Standard Investment Bank (SIB) in a research had stated that Giro’s core capital was Sh2.3 billion.
The two banks largely focus on small and medium sized enterprises which makes the acquisition seamless as their core remains the same.
Kenyans will be monitoring the banking sector in the following weeks on whether more mergers and acquisitions will occur and also whether the President will agree with MPs not to increase banks core capital.