National bank’s takeover by KCB set to change Kenya’s banking industry

Kenya’s biggest lender by assets KCB Group Thursday offered to buy 100 per cent of National Bank of Kenya through a share swap consisting of one KCB share for every 10 of National, in a new development vehemently denied by Capital Markets Authority (CMA) more than tow months ago.

CMA had in January 23 this year denied any knowledge of the takeover of National Bank of Kenya (NBK) by its rival lender Kenya Commercial Bank Group (KCB).

“The attention of the Capital Markets Authority has been drawn to the continued media reports on possible acquisition of majority shares of National Bank of Kenya Limited by KCB Group Plc. We wish to clarify that no regulatory filings have been made to the Authority by KCB Group regarding this matter and no confirmation of the existence of such a transaction has been received,” CMA said in its cautionary notice at the time, warning the public to exercise restraint while dealing with the lenders’ shares at the Nairobi Securities Exchange (NSE).

Unconfirmed reports indicate that the deal, whose talks have been in the offing since 2017 is worth Sh40billion with KCB rumored to be planning to shut about 34 National bank branches where it already has operations – a move that could render thousands of NBK’s staff jobless.

But today, the offer will mark the second major deal among lenders since the government capped commercial lending rates in 2016. CBA Group, a privately held bank and majority owned by Kenyatta family, is in process of merging with NIC Bank in in a deal which has been approved by shareholders of both parties.

The National Bank of Kenya (NBK) acknowledged in a statement that KCB Group had served it with a notice of intention to acquire 100 per cent of its ordinary shares in the proposed transaction, with a set of conditions by KCB to NBK for completion of the acquisition, including the latter delisting from the NSE and the conversion of 1,135,000,000 preference shares in the capital of the firm to 1,135,000,000 new ordinary shares.

The National bank is presently choked by huge burden estimated at Sh30.1billion in non-performing loans (NPLs) part of which it may be forced to write-off for non-recovery.

The lender is engaging its clients directly to reach a gentleman’s agreement –a move believed some top officials in the bank are using to get kickbacks from its corporate clients with huge debts, with assurances to ‘clear-off’ outstanding loans owed to the bank. The bank has unceasingly denied such allegations.

The revelation was made recently during summon made to the bank’s management that had appeared before the National Assembly Finance Committee chaired by Joseph Limo which had requested for detailed information on the ‘write-offs’ scheme.