Kenya’s National Industrial Credit Bank (NIC) is set to merge with domestic peer Commercial Bank of Africa (CBA) to create a combine entity with assets of nearly $4.4bn.

According to a Reuters report, the merger will be carried out through a share swap. However, the value of the transaction was not divulged by the companies.

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NIC-CBA merger:

Once the merger is completed, CBA shareholders will own 53% stake in the merged entity and the current NIC group shareholders will hold the remaining 47%.

NIC CEO John Gachora told the news agency that the bank aims to secure shareholder approval for the deal by first quarter of this year and necessary regulatory approvals by the second quarter.

The merger is expected to be completed by the third quarter of the year, Gachora added.

Last month, the two banks said that they will discuss the feasibility of a potential merger to combine their retail and corporate banking capabilities.

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NIC focuses on asset financing, while CBA specialises in retail banking operations.

The merged group will have more than 100 branches across Kenya, Tanzania, Rwanda, Uganda and Ivory Coast.

The NIC-CBA merger was primarily said to be driven by the government decision to provide a ceiling on commercial lending rates.

However, NIC chairman James Ndegwa denied the influence of government cap on the merger.

Ndegwa was quoted by Reuters as saying: “Even if interest rate caps were not there, this merger would have been considered. Rate capping or not, we would still be here.”