According to reports, the Kenyan Finance and National Planning Committee has rejected National Bank of Kenya’s (NBK) acquisition by Kenya Commercial Bank. The KCB group’s offer was to acquire 100 percent shareholding of the National Bank of Kenya.
Kenya Commercial Bank (KCB) is the largest commercial bank in Kenya in terms of assets. It operates in various locations including Tanzania, Uganda, Rwanda, Burundi, and South Sudan.
The committee, which investigated the proposed deal, is chaired by Kipkelion East MP Joseph Limo. The committee has instead proposed to sell off the additional shares of NBK, and raise the capital required by the bank.
The committee further asked the National Treasury and the National Security Fund, the principal shareholders of National Bank of Kenya, to search for an alternative funding source. Amid opposing views to the opinion of a change in the NBK funding source, if the current deal does not materialise, the opposition to the deal might lead to NBK incurring huge losses. NBK is already working with capital ratios that are below the required minimum.
Amid the acquisition move, the board of directors of National Bank of Kenya has made it clear that the lack of capital is the reason the bank’s business growth has become constrained.
KCB had made the offer in April and the acquisition was expected to be completed by October.
The committee stated that the price fixed by KCB at Sh3.801 per share, was much lower than the actual worth which is estimated to be at Sh6.1 per share. According to KCB’s estimates, the net value of NBK comes up to $58 million, whereas an independent evaluation puts the value at $87 million.
The unanimous view of the committee that National Bank of Kenya is much stronger than KCB with 86 branches in the country. The branch network was also a major reason why the committee opposed National Bank of Kenya’s acquisition by Kenya Commercial Bank.
A decision on National Bank of Kenya’s acquisition will be finalised only after it gets approved by Kenya’s parliament.