NAIROBI (Reuters) – Kenya’s NIC will merge with the country’s biggest privately owned bank, Commercial Bank of Africa (CBA), to create the third-biggest bank in the region, the chairman of NIC said on Thursday.

“Today we announce our intention to merge NIC Group and CBA Group,” Chairman James Ndegwa told reporters.

NIC aims to get shareholder approval in the first quarter of 2019, regulator approval in the second quarter, and formally merge in the third quarter, said NIC CEO John Gachora.

The merged bank will have an asset base of 444 billion Kenyan shillings ($4.41 billion), making it the region’s third-largest after KCB and Equity.

The transaction will take place though a share swap between the two banks, with current NIC group shareholders owning 47 pct of the merged entity and CBA shareholders owning 53 pct of the merged entity. NIC group will remain listed, Gachora said.

In December, the two banks said they would hold talks on a potential merger to combine their expertise in retail and corporate banking. NIC is a leading bank in asset financing and has a strong base of mid-sized corporate clients. CBA has a strong retail client base, including digital-only customers on its M-Shwari mobile platform. [nL8N1YB4PP]

The merger is the first major deal announced in the industry since the government capped commercial lending rates in 2016. In December, Finance Minister Henry Rotich said merger talks between the two banks were welcome, because a deal would help strengthen the financial sector.

($1 = 100.7500 Kenyan shillings)

Reporting by George Obulutsa; Editing by Himani Sarkar