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KCB to acquire struggling NBK

Its the year of Bank mergers and acquisitions. Just recently, the Kenyatta owned Bank CBA and shareholders of NIC Bank approved merger plans for the two banks. While the merger is yet to be approved by the Capital Markets Authority, once closed the entity will become Kenya’s third largest bank.

Now, the Kenya Commercial Bank (KCB) is seeking to acquire struggling National Bank of Kenya (NBK) in a move that will strengthen its position as the largest bank in the country. In the deal, KCB proposes to make the 100 percent acquisition through a share swap of 10 ordinary shares of NBK for every 1 ordinary share of KCB.

“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 KCB CEO Joshua Oigara.

However, the Nairobi Securities Exchange has halted the deal in what it is are impending material announcement from NKB.


WHAT DO THE MERGERS MEAN FOR YOU AS A CUSTOMER?

While “mergers and acquisitions”are fairly commonplace in the corporate world, they rarely impact you on a daily basis. But what if your bank  undergoes a merger? 

Account holders are, perhaps, the ones who witness the most changes due to the merger of banks. Although you will remain an account holder in the merged entity, you will be issued new cheque books and debit or credit cards.

In most cases, fixed deposit accounts and loan holders are never affected as the two qualify as contracts and thus the interest rates remain the same. However, the rate of interest you receive on your savings bank account might change. 

As a result of the merger 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.

Once your bank merges, the new bank may have different lending rules and interest rates. You may suddenly be earning more — or less — on your deposit accounts than you did before the merger or acquisition.

While it can be a confusing process, if handled well by the entities involved, a bank merger should not be too difficult for customers to navigate. Be prepared for small changes and trust your bank to communicate them to you when the time comes.

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