Updated: An Evaluation Of Chase Bank Suitors. Who Is The Fairest Of Them All?

It is now becoming evident that the Chase Bank saga will end with an acquisition, which in my opinion is great for all stakeholders, especially the depositors whose money is still held by the bank. So far, we have 5 declared suitors; KCB (On Citizen TV last evening, their CEO hinted that there would be a deal by end of week), Equity Bank, Centum, CBA and an unnamed Qatari bank who we are inclined to think is the Qatari National Bank.

Each of the five above has deep enough pockets to buy the bank, so that is not the question here. The question at hand is about strategy. How well will Chase Bank fit in with the acquirer’s current strategy, taking into consideration Chase Bank’s customer base.

People chose Chase Bank for 4 main reasons:

1. Customer service; on social media, many individuals and business owners asserted that they felt treasured and cherished. The systems may not have been perfect, but they enjoyed banking with Chase.
2. Product range
3. SME friendly lending practices
4. Aspirational brand: Unlike the market’s other SME banks, Chase Bank was branded for the “soon to be wealthy”. From the appearance of their bank branches and staff to their use of technology, it did not feel like a bank you would want to outgrow.

Based on the above 4 factors, who is the best fit? Where would a Chase Bank customer feel most comfortable?

Of the four Kenyan banks, I think KCB is the worst possible match for Chase Bank. Other than product where every suitor got a score, mainly because banking products are fairly homogenous and easy to change, KCB has no other attribute that a typical Chase Bank customer would find attractive. It is a large bank, that has been a banker for government for decades. Yes, they have tried to change perception, they have a very cool social media presence, but their systems are still very slow. I say this as a KCB customer, and many agree. The youthfulness of their CEO hasn’t yet trickled down the organization.

Centum is interesting despite the low score. They recently acquired K Rep and re-branded it to Sidian Bank, and from their advertising, it seems they are aiming for the same market segment as Chase Bank. However, in terms of strategy, I feel it would be daunting (and honestly a little crazy) to combine two acquisitions from two ends of the market and spin them into something new. But then, Centum has been an audacious company.

Equity Bank has the product range, it has the flexibility SMEs love, but it fails miserably on customer service, and it is not at all aspirational. Equity has established itself as the bank for the ordinary Kenyan, and the ordinary Kenyan business, and as seen earlier, the Chase Bank customer aspired for more than ordinary.

The Qataris have a big question mark. New entrant. If it is QNB as rumored, this would be a clean slate. They’re a huge bank, and their other acquisitions in Africa are large banks (Ecobank in Togo and Tunisian-Qatari Bank in Tunisia and QNB Al Ahli in Egypt). Can they pull off SME focus? I think so, especially if they were retain a local team to run the bank. HOWEVER, recent entrants to the Kenyan market have struggled, for this I blame our peculiar Kenyan banking habits. 🙂

This leaves us with CBA a recent Tier 1 entrant thanks to the M-Shwari partnership with Safaricom. While CBA has not been SME focused, it scores very well on the other attributes. Side by side, Chase Bank is a step-down for the CBA brand, but as an acquisition, CBA would instantly gain the traction it needs to establish itself as a solid Tier 1 bank without the Safaricom tag. I feel Chase Bank customers would love being in CBA.

So that’s my assessment, I have a strong feeling that this will not play out as above, but I am looking forward to the next couple of days. The banking sector hasn’t been this interesting in a long time.

Update: frontrunners on the acquisitionanalysis of this is quite interestingAs at 20th June 2017, we had two , Mauritian Based SBM Holdings which acquired Fidelity Bank, and Societe Generale, France’s third largest bank. May the best bank win! Meanwhile, KCB has expressed interest in acquiring National Bank. George Bodo’s .