KENYA – The Central Bank of Kenya (CBK) has approved the purchase of 100% share capital of the National Bank of Kenya (NBK) by the KCB Group.
The approval was granted in accordance with Section 13(1) (e) of the Banking Act on Monday.
“The acquisition will strengthen both institutions leveraging on their respective well-established domestic and regional corporate, public sector and retail franchises,” read CBK’s approval statement.
The deal had already garnered the support of the lender’s respective shareholders and an approval from the Capital Markets Authority (CMA).
National Bank of Kenya shareholders have since taken up KCB’s share-swap offer which entailed a bargain of 10 NBK shares for every single one of KCB’s.
NBK’s board had in July accepted the offered in spite of the banks significant undervaluation having attracted no competing deals across the bidding period.
Urging the shareholders to take up KCB’s offer, NBK’s chairman Mohamed Hassan said; “Although NBK remains a strong bank, it requires additional capital to meet regulatory capital and grow its business, which capital can be provided by KCB.”
CBK Governor Patrick Njoroge had backed the deal having viewed mergers and acquisitions (M&A) as the solution to Kenya’s overpopulated banking landscape.
NBK was started in 1968 as a wholly-owned Government entity. The Government of Kenya has over time, reduced its shareholding in NBK.
The bank is listed at the Nairobi Stock Exchange and owns two subsidiaries: NBK Insurance Agency Limited, and Natbank Trustee and Investment Service Limited.
KCB first pursued NBK earlier this year after the NBK registered a 98 percent drop in profits from Sh400 million to Sh7 million for the year ended December 2018 as the lender struggled with bad loans.
Some of the conditions outlined in the buyout includes NBK delisting from the Nairobi Securities Exchange, 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 discounted offer of Ksh.3.80 per share was an advantage to the NBK although KCB’s takeover banker in April this year is seen as hostile to the fully state-owned banker.
KCB is expected to disclose the offer results on September 13 ahead of the accreditation and listing of the transferred shares at the end of September.
The share-swap window closed at the end of business on Friday having already gathered the support of a majority 77.6 % share stake or an equivalent 263 million shares of NBK.