DTB to diversify its operations in Asia with a Ksh.1.8 billion acquisition of Habib Bank Limited (HBL)
Diamond Trust Bank of Kenya Limited (DTBKL) is set to acquire Habib Bank (K) Limited (HBL) for about Ksh.1.8 billion. The acquisition will essentially be a share swap with Habib investors getting additional shares in DTB. The transaction is in the process of getting regulatory approvals both in Kenya and Pakistan. It is expected to be completed by July 2017.
“The Central Bank of Kenya (CBK) announces that it has been advised by both Diamond Trust Bank of Kenya Limited (DTBKL) and Habib Bank (K) Limited (HBL) of DTBKL’s intention to acquire HBL. The transaction is subject to regulatory approvals in Kenya and Pakistan.”
-via statement from CBK
Currently, Habib investors are minority shareholders of DTB with a stake of 11.97 percent. Once the share swap is completed, Habib investors will get an additional 4.75 percent stake in DTB. They will be allocated 13.2 million shares in DTB at a price of Ksh.137.39.
This news comes after DTB announced a 17 percent rise in net profit to Ksh.7.7 billion last year. This results essentially made DTB the lender with the biggest profit jump so far as the others ‘could not shrug off the effects of the interest cap rate.’
As at 31st December, 2016, Diamond Trust Bank was ranked 6th out of the 41 banks that operate in Kenya. At that time, its market share stood at 6.1 percent. This was complimented with a network of sixty one branches across the country.
On the other hand, Habib Bank ranked 33rd out of 41 banks in the same period. Its market share as at 31st December, 2016 stood at 0.34 percent. In the same period under review, the bank boasted of a network of six branches.
DTB commenced operations in 1946 as a financial institution. It converted into a fully-fledged commercial bank in 1997 and subsequently merged with Premier Savings and Finance Limited in March 1999. The bank has a footprint in Kenya, Tanzania, Uganda and Burundi.
Similarly, HBL was established in 1941 in Mumbai, India. Consequently, its Head Office moved to Karachi, Pakistan in 1947. The bank has been operating in Kenya since 1956 when it opened its first branch in the coastal city of Mombasa.