The news:
- Access Bank Group, a Nigerian financial services conglomerate, could pay KCB Group approximately KSh13.2 billion ($99.6 million) to acquire its subsidiary, the National Bank of Kenya (NBK).
- However, a report says the exact figure is expected to be revealed on the date of the deal’s conclusion.
- With the deal expected to be concluded between six and nine months, Paul Russo, KCB Group Chief Executive Officer (CEO), disclosed that the NBK and Access Bank have entered into a binding agreement.
The deal will see Access Bank pay 1.25 times the book value of NBK, which was around KSh10.57 billion ($79.28 million) as of the end of December 2023, putting the value of the deal at about KSh13.2 billion ($99.6 million).
The acquisition, which involves Access Bank buying out all of the company's shares, is still subject to Kenyan and Nigerian regulatory approvals.
KCB Group acquired NBK, a state-controlled medium-sized lender, in a rescue deal facilitated by the Central Bank of Kenya (CBK) in 2019.
However, as Joseph Kinyua, KCB Group Chairman, later stated about the efforts to turn NBK around, some significant legacy issues quickly wiped out all the company's gains.
Consequently, KCB, which had indicated that it was investing in NBK for the long haul, had to rethink its position after the narrowing capital adequacy ratios in the last two years.
The NBK sale announcement is coming at a time when KCB Group’s full-year net profit dropped by 8.3% to KSh37.46 billion ($280.95 million) from KSh40.83 billion ($306.23 million).
Since KCB consolidated DRC Congo’s Trust Merchant Bank (TMB) into its operations after acquiring an 85% stake for KSh25.1 billion ($188.25 million) in mid-December 2022, staff costs rose 26% to KSh38.14 billion ($286.05 million).
For the first time in 21 years, KCB Group shareholders won’t receive dividends, a necessity to preserve capital, especially for KCB Bank Kenya.Meanwhile, in January 2024, Access Bank bought a majority stake in Finance Trust Bank in another East African country, Uganda, in a deal that gave the Nigerian lender 80% ownership.
