The Banking Sector: Kenya Commercial Bank Buys National Bank

Kenya Commercial Bank is buying 100 percent of National Bank in yet another milestone set to shift the state of the banking sector in Kenya according to CMA.

KCB Group has said that an agreement has been reached for it to acquire each share of National Bank of Kenya (NBK) at 4.19 shillings per share.

National Bank of Kenya has been struggling to remain afloat with the burden of massive losses heavily weighing it down coupled with cases of corruption and fraud.

The buying of National Bank by KCB Group comes a few months after the group offered to acquire the defunct Imperial Bank with the transaction having already been completed.

The deal between KCB Group and National Bank will be completed by creating and issuing new 147.3 million shares to investors of National Bank, “taking into account the two bank’s average share price in the 180 trading days ending mid-March.” (Business Daily)

Currently, KCB Shares are trading at 41.9 shillings per share and the lender has been featuring among the top movers of the day at the Nairobi Securities Exchange.

NBK share closed at 4 shillings on Thursday but the average price over the period stood at 5.64 shillings per share. KCB Group is buying the share at a discount of 1.45 shillings per share at 4.19 shillings instead of the average 5.64 shillings.

Read:

• KCB Group Offers to acquire 100% of National Bank
• Central Bank Accepts the Final Offer from KCB to Acquire Imperial Bank
• KCB Group Leads in Banks by Assets Based on 2018 Financials

“The proposed transaction will further consolidate the banking sector in Kenya and will create stronger institutions enabling KCB to play a bigger role in the financial inclusion agenda. The acquisition would accelerate the Group’s growth ambitions and enhance value to all stakeholders,” said Mr. Oigara when the lender first made an offer.

In April, the Central Bank of Kenya (CBK) and Kenya Deposit Insurance Corporation (KDIC) announced the acceptance of the Final Offer from KCB, which further enhances recovery for depositors.

In letters dated March 29 and April 2, 2019, KCB communicated to CBK and KDIC a modification of the terms of the Binding Offer with respect to the completion of the verification of the loan process.

CBK and KDIC, in the December 2018 announcement, had announced a release of funds increasing a total recovery to approximately 35 percent of original eligible deposits held at the date of receivership.

Funds were previously made available in three tranches, and approximately 92 percent of eligible depositors had been granted full access to their balances. The accepted Final Offer includes a further recovery of 19.7 percent of eligible depositor balances remaining at IBLR.