CBK approves KCB’s acquisition of National Bank of Kenya


CBK approves KCB’s acquisition of National Bank of Kenya

In Summary

  • The receipt of approval by the banking sector regulator leaves KCB’s buyout of NBK all but done with the deal having already garnered the backing of the lender’s respective shareholders and a green light from the CMA.
  • CBK’s approval which was almost inevitable having seen the reserve bank prop up the deal from the get go in its support for stronger banking institutions in the country.
  • KCB is expected to disclose the offer results on September 13 ahead of the accreditation and listing of the transferred shares at the end of September.

The Central Bank of Kenya (CBK) has approved the 100 percent share capital acquisition of the National Bank of Kenya (NBK) by the KCB Group.

The receipt of approval by the banking sector regulator leaves KCB’s buyout of NBK all but done with the deal having already garnered the backing of the lender’s respective shareholders and a green light from the Capital Markets Authority (CMA).

CBK’s approval which was almost inevitable having seen the reserve bank prop up the deal from the very beginning in its support for stronger banking institutions in the country.

“The acquisition will strengthen both institutions leveraging on their respective well-established domestic and regional corporate, public sector and retail franchises,” read CBK’s approval statement.

CBK Governor Patrick Njoroge had explicitly backed the deal in previous public sittings having viewed mergers and acquisitions (M&A) as the cure to Kenya’s overpopulated banking landscape in addition to further strengthening the institutions’ which took a significant thrashing from the back to back collapse of three lenders in 2015 and 2016.

KCB’s acquisition of NBK is expected to now breeze past the final corner ahead of the full-circle completion of the deal, slated for later in October.

National Bank of Kenya shareholders have since taken up KCB’s share-swap offer which entailed a bargain of 10 NBK shares for every single one of KCB’s.

The share-swap window closed at the end of business on Friday having already gathered the support of a majority 77.6 percent share stake or an equivalent 263 million shares of NBK.

The uptake of the offer beyond the 75 percent share-stake two days ahead of the offers closure last week marked a near successful share conversion as it by itself prompted the de listing of NBK from the Nairobi Securities Exchange (NSE)

A capture of a further 12.5 percent share slice at the close of the offer period on August 30 to cross the 90 percent threshold would see KCB reserve the right to compulsory acquire the remaining shares of NBK.

KCB is expected to disclose the offer results on September 13 ahead of the accreditation and listing of the transferred shares at the end of September.

While KCB’s run on NBK represented a hostile takeover of the fully-State owned banker in April this year, the discounted offer of Ksh.3.80 per share came as a saving grace to the lender who had run into a squeezing capital crunch shadowed by repeated episodes of financial misappropriation by past directors.

NBK’s board had in July urged shareholders to take up KCB’s offer in spite of the banks significant undervaluation having attracted no competing deals across the bidding period.

“Although NBK remains a strong bank, it requires additional capital to meet regulatory capital and grow its business, which capital can be provided by KCB,” National Bank of Kenya Chairman Mohamed Hassan lobbied shareholders in circular dated July 9.

KCB which owes five other subsidiaries in the region, including a representative office in Ethiopia seeks to create East Africa’s first Ksh.1 trillion valued bank in a quest for consolidation and regional expansion.

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Story By Kepha Muiruri
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