NCBA Group Plc, the Kenyan lender formed from the 2019 merger of NIC Bank and Commercial Bank of Africa (CBA), may be acquired by Standard Bank Group Ltd.’s Kenyan unit, a move that could create Kenya’s third-largest bank by assets, according to Bloomberg.

The potential merger would combine Stanbic Holdings Plc, in which Standard Bank holds a 75% stake, with NCBA, giving the combined bank approximately 1.1 trillion shillings ($8.5 billion) in assets. NCBA has a market value of roughly 125.6 billion shillings. On Monday, its shares rose 10% to a record 76.25 shillings, while Stanbic shares fell 1.3 percent despite a 63 percent gain over the past year.

Sources familiar with the discussions said talks are ongoing and no agreement is guaranteed. Standard Bank, which has historically focused on organic growth in East Africa, declined to comment, noting any formal announcement would be made through regulatory channels. Chief executives Joshua Oigara of Stanbic and John Gachora of NCBA did not respond to requests for comment.

Analysts say the transaction aligns with Standard Bank’s strategy to expand its top-three position across African markets. “They understand the market, which is a significant advantage,” said Adrienne Damant, analyst at Avior Capital Markets. Maureen Kirigua, senior analyst at Emerging & Frontier Capital LLP, added that NCBA’s share rally reflects investor confidence and could reshape competition among Kenya’s largest banks.

The deal also comes amid broader consolidation in Kenya’s banking sector, following the Central Bank of Kenya’s tenfold increase in minimum capital requirements. Both Stanbic and NCBA already exceed the new threshold. “Closing this deal could pave the way for further acquisitions over the next decade,” said Ronny Chokaa, senior research analyst at Capital A Investment Bank.