- The government is confident that these engagements will yield positive results for banks involved
- He added that the state will support Consolidated Bank’s bid to extended the maturity of its Sh2 billion medium-term note by three months
Treasury has defended the multibillion-shilling takeover of National Bank of Kenya (NBK) by KCB, a day after the National Assembly opposed the move.
In a statement to media, acting Treasury CS Ukur Yattani said the government,through the National Treasury and NSSF is a principal shareholder in the two banks and supports need for a stronger bank.
"The government as a shareholder has been engaged in the process. In our strategic role, we recognise the need for strong and stable banks for our fiscal responsibilities," Yattani said.
He added that both KCB and NBK have already made public pronunciation on the proposal to the merger and have engaged shareholders of NBK to swap their shares with KCB shares.
"All stakeholders including Parliament have been consulted. The government is confident that these engagements will yield positive results for banks involved and support the bigger government agenda of strengthening the financial sector in the country," Yattani said.
He added that the state will support Consolidated Bank’s bid to extended the maturity of its Sh2 billion medium-term note by three months
The seven-year bond, which was issued to shore up the bank’s capital, allowing it to lend more to its customers, was due to mature on July 22. It will now mature on October 22 under the same terms with additional interest payments for the extension.
Consolidated Bank is 85.8 per cent state owned, having been formed in 1989 when the state merged nine troubled financial firms.
Parliamentary Finance and National Planning Committee on Wednesday tabled a report opposing the takeover, proposing a recovery plan for NBK.
The Kipkelion East MP Joseph Limo led committee asked NBK's principal shareholders - the National Treasury (22.5 percent) and the National Social Security Fund (NSSF) (48.05 per cent), reject KCB's offer to acquire 100 percent shareholding.
It wants Treasury to seek alternative ways to fund the lender despite fears of collapse if the planned takeover falls through.
“NBK is a strong bank with good asset value. The only challenge facing it that of core capital and the total risk: weighted assets ratio, which is 2.4 per cent, below the minimum statutory requirement of 10.5 per cent,” the committee report says.