Kenya Commercial Bank Group (KCB) takeover of the National Bank of Kenya (NBK) yesterday received shareholders backing at the lender’s annual general meeting.
Shareholders unanimously agreed to the proposal of 10-for-1 share swap transaction with a par value of Sh5 of NBK.
The approval sets stage for final phases of transaction including similar approval from National Bank shareholders and a rubber stamp form the Competition Authority of Kenya (CAK).
KCB, the largest bank in Kenya in terms of asset value expects to conclude the acquisition process by October and delist NBK from the Nairobi Securities Exchange.
KCB had in April proposed 100 per cent acquisition of the struggling lender that reported a 98.3 per cent drop in profits for the year ended December 31, 2018.
The group chief executive Joshua Oigara said the acquisition is part of the bank’s agenda to deliver Kenya the first bank with Sh1 trillion balance sheet.
The combined giant lender will tower over rivals both locally and in the region with a mega balance sheet of Sh828 billion as per the two lenders’ December 2018 disclosures.
“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 Oigara.
He added that NBK will be operated as a standalone subsidiary of KCB Group for a period of two years post-acquisition and thereafter fully integrate NBK into KCB Bank Kenya.
The transaction will be the second major deal among Kenyan lenders since the government capped commercial lending rates in 2016, squeezing their profit margins and forcing them to look for survival strategies, including consolidation.
CBA Group, associated with President Uhuru Kenyatta’s family is also in the process of merging with NIC Group to form the third-biggest bank by assets in East Africa.
KCB Group shareholders went home smiling after pocketing one of the highest dividend in the banks history on the back of good performance in 2018 that saw the group report Sh24 billion for the year ended December 31, 2018.
“As a result of the impressive business growth in the year 2018, we will be paying a record dividend of Sh3.50 per share, the highest ever in the over 120 year history of the Bank, a feat we plan to maintain, if not exceed in the coming years,’’ KCB chairman Andrew Kairu said.
