KCB seeks Parliament’s indulgence on NBK purchase


KCB seeks Parliament’s indulgence on NBK purchase
KCB Group Chief Executive Officer Joshua Oigara addresses stakeholders during the Group's investor briefing on March 6, 2019 PHOTO | COURTESY

In Summary

  • The bank which makes up the acquisition party in the transaction has until now been largely sidelined from the ongoing probe of the deal which remains subject to final regulatory approval.
  • The stance by KCB is on the back of the offer’s rejection by the National Assembly on Wednesday where MPs urged both the National Treasury and the NSSF- NBK’s majority shareholders, to drop the bid.
  • KCB capture of NBK is aligned to the Group’s growth and expansion strategy which is pegged on the creation of the first Ksh.1 trillion asset-valued lender.

KCB has now sought for the indulgence of Parliament in relation to the company’s experienced stumbling blocks in its quest for the full acquisition of the National Bank of Kenya (NBK).

The bank which makes up the acquisition party in the transaction has until now been largely sidelined from the ongoing probe of the deal which remains subject to final regulatory approval by the Capital Markets Authority (CMA) and the Central Bank of Kenya (CBK).

“We have  sought and look forward to being given a chance by Parliament to discuss this transaction. We are conscious that Parliament has a role to play in national governance and we shall endeavor to uphold the relevant legal and regulatory requirements at every stage of the transaction,” KCB Group said in a statement to media houses on Thursday.

“The offer was made in the best interest of KCB and NBK shareholders”

The stance by KCB is on the back of the offer’s rejection by the National Assembly on Wednesday where MPs urged both the National Treasury and the National Social Security Fund (NSSF)-NBK’s majority shareholders, to drop the bid.

The Parliamentarians poured cold water on the offer by KCB sighting NBK as a strategic State asset while recommending the Treasury Ministry to instead seek out alternatives to plugging the lender’s financial plight.

Treasury has however subsequently clapped back on the objection by Parliament upholding the offer as the consolidation of government interests in light of the State being a principal shareholder in both banks.

“The proposed merger of the two banks was intended to consolidate government interest. The government in its strategic role, recognized the need for strong and stable banks in support of its fiscal responsibilities,” Treasury Acting Cabinet Secretary Ukur Yattani said.

The board of the National Bank of Kenya has already resigned itself to KCB’s offer of Ksh.3.80 per share, there being no further competing bids in sight and following approvals by its key shareholders.

KCB has since commenced the acceptance of NBK shares as enshrined in the 10:1 share-swap offer document ahead of the closure of the changeover on August 30, 2019.

While Parliament stands as the greatest stumbling block to the transaction, the deal has been propped by the recent dismissal of legal proceedings against NBK’s takeover, with NBK Company Secretary Habil Waswani, confirming the discharge to Citizen Digital.

The National Assembly has remained a roadblock to the transaction so far having further recommended the scrutiny of NBK’s books of accounts by the Office of the Auditor General at the start of July.

This against NBK’s board insistence on the sound check of its financial statement through its privately contracted auditor.

At the center of contest to the deal has been KCB’s discounting of NBK’s assets to Ksh.5.6 billion against a disclosed fair pricing valuation of Ksh.9 billion.

KCB capture of NBK is aligned to the Group’s growth and expansion strategy which is pegged on the creation of the first Ksh.1 trillion asset-valued lender.

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Story By Kepha Muiruri
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