* To buy controlling stake in Banque Populaire du Rwanda

* Deal will make KCB the second-biggest bank in Rwanda

* To take full ownership of ABC Tanzania, eyes DRC next

NAIROBI, Nov 26 (Reuters) - Kenya's top lender by assets, KCB Group, has entered a binding agreement to buy a controlling stake in Banque Populaire du Rwanda and take full ownership of ABC Tanzania at a combined value of $40 million, it said on Thursday.

Kenyan commercial banks are looking beyond their borders for acquisitions, seeking to tap opportunities in East Africa which are driven by rapid economic growth and trade integration.

KCB, which already has operations in Rwanda, Burundi, Tanzania, Uganda and South Sudan, wants to strengthen its position in those markets and beyond, CEO Joshua Oigara told an online news conference after the deal was announced.

"When you build transactions growth through business combinations and acquisitions, you don't stop," he said.

"We are still very keen for an opportunity for us to grow our business into the DRC (Democratic Republic of Congo) and that is what we will be looking for in the next two years."

The deal for the purchase of the shares in the Rwandan and Tanzanian lenders is mainly with Atlas Mara Limited, which owns them.

KCB will pay $32 million for the shares in the Rwandan bank and $8 million to fully acquire ABC Tanzania, Lawrence Kimathi, the group's chief financial officer, told the news conference.

"By mid-next year we should have completed this transaction," Kimathi said, adding the deal would be funded by KCB's cash reserves.

Once completed, it will double KCB's market share in Rwanda and catapult it to the No. 2 bank position in the country, from number six now, Oigara said.

The Tanzanian acquisition will lift KCB into the top 10, from number 13 currently, he added.

KCB, which requires regulatory approvals for the transaction, plans to increase the contribution to its income from regional subsidiaries to 20-25%, from 10% currently, in the next 3-5 years, Oigara said.

The group acquired National Bank of Kenya last year, a deal it expects to contribute 1 billion shillings ($9.10 million) to its profit this year.

($1 = 109.9000 Kenyan shillings) (Editing by Mark Potter)