National Bank’s buyout by KCB Group to be complete by October

KCB Group, expects to complete its acquisition of National Bank of Kenya by October.

This follows last month’s decision by the lender – the largest bank by assets, offered to buy National Bank (NBK) through a share swap of one KCB share for every 10 of NBK.

The group expected to delist NBK’s shares from the Nairobi bourse before October, with NBK to operate as a stand-alone subsidiary before integrating its operations within about two years of the acquisition.

The combined entity could attain a return on equity of 26.9% in 2023, which had a return on equity of 23% last year.

The transaction will be the second major deal among Kenyan lenders since the government capped commercial lending rates in 2016, squeezing their profit margins and forcing them to look for survival strategies, including consolidation.

CBA Group, a privately held bank, is also in the process of merging with NIC Group to form the third-biggest bank by assets in East Africa. There have been other smaller transactions including Diamond Trust Bank’s acquisition of Habib Bank Kenya in 2017.

KCB is also finalising the acquisition of 25 billion shillings ($247 million) worth of assets from Imperial Bank, which collapsed in 2015.

The proposed de-listing of NBK is however, subject to approval by NBK shareholders.

KCB has not given a valuation for NBK. The merged entity could have a balance sheet of 1 trillion shillings ($9.90 billion) by the end of 2022.