On Monday the Central Bank of Kenya approved the acquisition of NBK by KCB. The acquisition has strengthened KCB’s position as the largest bank in Kenya.
“The acquisition will strengthen both institutions leveraging on their respective well-established domestic and regional corporate, public sector and retail franchises,” CBK said.
What you need to know about the Acquisition
Upon acquisition, NBK will continue to operate as a subsidiary of KCB Group for a maximum period of two years.
Spearheading the integration of the two banks will be KCB’s Group Director for Regional Businesses, Paul Russo, who will act as the managing director of NBK.
As indicated in our earlier article on how the customer is affected, some branches may be closed. For the NBK KCB merger, there may be very few branches that close shop since NBK has some very exclusive branches like at the airports.
According to the Business Daily, KCB has already received 262.97 million shares, equivalent to 77.62 percent of NBK’s total of 338.8 million issued shares. This gives the bank legal powers to compulsorily buy out any dissenting NBK shareholders. KCB expects to list the additional shares through which it is executing a swap for NBK’s equity on September 30.
KCB on its part has valued NBK at Sh.5.6 Billion in the share swap transaction, awaiting the regulator’s approval.
The now collapsed National Bank of Kenya had bad loans totaling to Sh.31.4 billion. KCB on it’s part has said that it will move to aggressively recover the bad loans, signalling tough times ahead for defaulters who are likely to face the auctioneer’s hammer.
What Next For KCB
With the NBK acquisition almost through, KCB is set to focus its eyes on another bank, ‘Imperial Bank’.
Currently, the bank has subsidiaries in Rwanda, Burundi, South Sudan, Tanzania and is eyeing the Ethiopian market where it has a representative Office.
KCB is also set to buy out some banks in Rwanda and DRC in a plan that seeks to solidify its top position in East and Central Africa. The CEO also recently said they are looking to open a representative office in China to take advantage of the growing Chinese trade deals with Africa countries.
Whether their strategies of going all out in the quest to be at the top yields fruits, our hope is that the banking sector in Kenya continues to grow.