The Central Bank of Kenya (CBK) has approved the 100 percent acquisition of National Bank of Kenya (NBK) by KCB Group, currently the largest bank by asset base in Kenya.
KCB Group is set to take over National Bank of Kenya through a share swap. Those with shares in NBK had until last Friday to swap their shares with shares in KCB Group. 10 shares in NBK gave one 1 share in the new merger.
The merger will create the largest bank by asset as well as market share with a balance sheet of 828 billion shillings. Currently, KCB is still the largest bank in assets in Kenya.
National Bank has been going through some financial turmoil leading to it registering huge losses. For the first 6 months of 2019, however, the lender jumped back into profitability by registering 150 million shillings in net profits.
The increase in earnings for NBK by 19 percent was attributed to the increased income to 3.13 billion shillings from 2.61 billion shillings in 2018 on the back of government securities as well as loans and advances.
Deposits from customers dropped by 4.67 billion shillings to 91.33 billion shillings from 95.99 billion shillings. Loans and advances to customers dropped by 446.3 million shillings to 47.3 billion shillings when compared to last year’s six-month position of 47.8 billion shillings.
The National Treasury, through the acting Treasury Cabinet Secretary Ukur Yatani, has already endorsed the takeover saying Parliament and government are fully behind the KCB’s move.
The assurance from the CS Treasury came after the objections that were raised by the Departmental Committee of Finance and National Planning who were against the buyout saying the deal was only beneficial to KCB Group and not the shareholders.
KCB Group, on its part, said it was ready to present a justification for the buyout which has been seen as the only way out for the ailing NBK.