KCB to keep National Bank of Kenya running as a separate brand


KCB to keep National Bank of Kenya running as a separate brand
KCB Group Chairman Andrew Kairu rings the tarding bell to mark the listing of additional shares on the NSE trading floor on November 4 PHOTO | COURTESY

In Summary

  • The lender who recently rounded of its acquisition of the capital strapped bank says the move is aligned to strategy by offering two compelling choices to customers.
  • KCB stock of non-performing loans (NPLs) as a share of its total loan book jumped to 12 percent in the aftermath of the acquisition having inherited a balance sheet with a net bad loan exposure of Ksh.12.4 billion.
  • On Friday, KCB listed an additional 142,979,717 shares from the resulting transaction to see its market cap at the Nairobi Securities Exchange (NSE) surge marginally to Ksh.178.4 billion.

The KCB Group is expected to keep the National Bank of Kenya (NBK) brand running on the side as a distinct brand over the long-term.

The lender who recently rounded off its acquisition of the capital strapped bank says the move is aligned to strategy by offering two compelling choices to customers.

“The license will continue to remain. NBK is going to run forever as we are not in the business of revoking its banking license,” said KCB Group Chief Executive Officer Joshua Oigara.

KCB sealed the buyout of NBK on September 6 after a successful share-swap offering to shareholders which priced the bank at a fairly discounted Ksh.5.6 billion.

The acquirer subsequently appointed its Director of Regional Businesses Paul Russo as the National Bank of Kenya designate Managing Director who is now set to provide checks and balances on NBK’s portfolio before its full incorporation into the KCB Group level at the end of 2021.

According to Mr. Oigara, attention primarily shifts to the recovery of NBK’s outstanding loans which mainly entail private sector debt covering the real estate sector; manufacturing, infrastructure and agriculture.

KCB stock of non-performing loans (NPLs) as a share of its total loan book jumped to 12 percent in the aftermath of the acquisition having inherited a balance sheet with a net bad loan exposure of Ksh.12.4 billion.

Nevertheless, KCB Group has been insistent on the quality of NBK which captures the majority of government and institutional linked accounts which between themselves generate a pool of cheap funds for onwards lending.

“The view that NBK makes for a bad franchise is a mere creation. For us, there is a chance to really grow our business beyond the psychological limit of Ksh.1 trillion of balance sheet size,” added Mr. Oigara.

The capture of NBK served to recapitalize the bank’s core capital base which for long remained in the red and well below the capital adequacy threshold prescribed by the Central Bank of Kenya. (CBK)

As of June 30, all of NBK’s key capital ratios were in the red save for the liquidity ratio which represents the ability of the bank to meet its short term repayments through cash.

The bank faced a 6.7 percent deficit in its coverage of customer deposit liabilities even as NBK’s total risk weighted assets outstripped the Group’s core capital base.

On Friday, KCB listed an additional 142,979,717 shares from the resulting transaction to see its market cap at the Nairobi Securities Exchange (NSE) surge marginally to Ksh.178.4 billion.

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Story By Kepha Muiruri
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