Bank of Uganda Approves NC Bank, CBA Merger
The Bank of Uganda has issued a letter of no objection to the integration of NC Bank and Commercial Bank of Africa to make one bank, with the deal expected to be completed at the end of June.
The merger of the banks had already received approval from the Central Bank of Kenya, where both banks are headquartered, but needed approval from BOU to integrate the Uganda subsidiaries.
In a joint statement on Monday, both banks said the merger had received a letter of “no objection” meaning it can go ahead as planned.
Anthony Ndegwa, the CEO, Commercial Bank of Africa, said the coming together of the banks will also involve the new brand that will reflect both banks’ values.
He said “we are on the final leg of becoming one bank.”
Sam Ntulume, the CEO of the NC Bank Uganda, said “our plan is to finalize harmonization of our systems…across our channels in Uganda.”
Together, both banks say the Uganda unit will see assets reach 548 billion Uganda shillings, giving them more strength for market competition.
NC Bank turned a profit of Shs 3bn in 2019 from a Shs 4.3bn loss in 2018, reflecting the fact that the bank was getting its footing in the industry.
On the other, CBA went the other way from a 600m shillings profit to a loss of Shs 10bn, one of biggest reversals the industry saw last year.
Paul Corti Lakuma, a researcher at Economic Policy Research Centre, said the merger means the new bank will have the capacity to compete favorably with industry leaders.
He added that it could me it will have more resources to develop new products that wouldn’t have otherwise been done by each on their own.
On a negative note, he said, the merger also means a single bank might lead to job losses as merging some departments means doing away with some employees.
In Kenya, it is NIC Group that is merging with CBA and the bank will be amongst the largest financial institution in East African region. The group’s assets will be 444bn Kenya shillings (15.7trillion Uganda shillings), according to an earlier statement.