Cooperative Bank of Kenya has initiated negotiations to purchase the entire business of Jamii Bora Bank to prepare for the rising competition in the banking sector.

The deal has been approved by the board of Cooperative Bank of Kenya.

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“The board of directors of Co-operative Bank of Kenya Ltd has approved the progression of discussions with Jamii Bora Bank Ltd which, if successful, would lead to the Co-operative Bank acquiring the 100% shareholding in Jamii Bora Bank,” the bank’s company secretary Samuel Kibugi said in a statement.

Welcoming the move, Kenya’s banking sector regulator The Central Bank of Kenya (CBK) said that this will enhance the stability of the country’s banking sector.

“CBK welcomes the transaction which will diversify the business models of the two institutions and enhance the stability of the Kenyan banking sector,” the statement issued by the regulator read.

This is the latest example of consolidation in the banking industry of Kenya.

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Recently, Commercial Bank of Africa merged with NIC Bank to form the NCBA group.

Commercial Bank of Africa was previously interested in buying Jamii Bora but instead went ahead with NIC Bank acquisition.

In case the talks materialise, Jamii Bora acquisition will surge Co-operative Bank’s total assets to KES462.2bn ($4.5bn), bringing it almost on part with its nearest rival, NCBA Bank.

The deal, however, is subject to receipt of approvals from the CBK, Capital Markets Authority, and the Competition Authority of Kenya.

Co-op Bank, which commenced operations in 1965, is predominantly owned by the Kenyan co-operative movement.

With a market share of 9.63%, it was ranked fourth-largest bank in terms of the market share at the end of last year. It operates 159 branches in Kenya and South Sudan.