Branch International, a mobile money lending app, has received regulatory approval to buy controlling shares in Century Microfinance Bank. In a notice published in the Kenya Gazette of Friday, May 7, Branch International was authorized to acquire 84.89% of the issued share capital in Century Microfinance Bank.
“In accordance with the provisions of Article 46 (6) of the Competition Law of 2010, it is notified for general information that, in the exercise of the powers conferred by the Competition Law, the Competition Authority has authorized the proposed transaction as stated,” reads an excerpt from the Gazette notice.
Upon acquisition of majority of the stake, the acquirer and the target are each required to maintain the terms agreed with the borrowers for all loans existing on their loan books at the time of acquisition.
In addition, the Acquirer and the Target will each retain their existing performing and non-performing loans in accordance with their terms until and until the expiration of such loans. This will be done as long as said terms do not contravene the provisions of the Competition Act 12 of 2010.
This decision is a strategic shift towards the formal lending sector. The move came a month after parliament approved a bill to regulate mobile lending rates and the treatment of delinquent credit to protect borrowers from predatory lending.
Branch is currently one of the most popular apps in Kenya on the Google Play Store, while Century Microfinance Bank specializes in providing financial services to MSMEs. The Bank was licensed by the Central Bank of Kenya as a deposit accepting microfinance institution in 2012 to provide a full range of financial services such as savings accounts and credit facilities.
The Central Bank of Kenya (CBK) currently regulates banks and micro-lenders. There is currently a bill in Parliament to amend some of the current terms and conditions of mobile lending apps.