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The Competition Authority of Kenya (CAK) has given approval to Premier Bank Limited (Somalia) to acquire a 62.5 percent stake in First Community Bank (FCB), Kenya. Premier Bank, a privately owned Sharia-compliant commercial bank incorporated in Somalia came into existence in 2013.
The Competition Authority of Kenya (CAK) has given approval to Premier Bank Limited (Somalia) to acquire a 62.5 percent stake in First Community Bank (FCB), Kenya. Premier Bank, a privately owned Sharia-compliant commercial bank incorporated in Somalia came into existence in 2013.
Adano Wario, acting Director-General at CAK stated that CAK has authorised the implementation of the proposed merger. The deal, whose value is still not disclosed, is expected to help FCB to maintain the required core capital. FCB’s core capital had dropped to Sh924 million against the mandatory minimum of Sh1 billion.
The diminished capital impacted FCB’s core capital to total risk-weighted assets ratio. The ratio plunged to 7.1 percent compared to the required minimum of 10.5 percent. At the same time, the total capital to total risk-weighted assets ratio also stood at 11 percent against the allowed minimum of 14.5 percent.
After receiving a license from CBK in 2007 FCB commenced official operations on June 1, 2008, as the first fully-fledged Shariah-compliant bank in Kenya. Since last October, the Bank ran into problems, triggered by an alleged system hitch that disrupted operations. Soon the Bank started curtailing cash withdrawals and cheque clearance leading to a heavy backlog. This led to panic withdrawals which worsened the crisis
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Kenya has witnessed several Bank deals in the past 10 years with due support from CBK, which viewed them as a means to inject stability.
