Access Bank to acquire National Bank of Kenya
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Access, which already runs a small unit in Kenya after another acquisition in recent years, said NBK would help it to expand in the country and take advantage of growing trade in the region
Kenya’s KCB Group has agreed to sell its subsidiary, the National Bank of Kenya (NBK) to Nigeria’s Access Group KCB’s chief executive said on Wednesday (20 March).
Paul Russo told an investor briefing the deal was struck at 1.25 times book value but did not give the exact figure.
“The right thing to do is to accept a binding offer from Access Group,” he said. KCB Group shares were up 9.9% following news of the deal.
Access, which already runs a small unit in Kenya after another acquisition in recent years, said NBK would help it to expand in the country and take advantage of growing trade in the region.
KCB, Kenya’s second-biggest lender, bought NBK, a medium-sized lender that was then controlled by the state, in a rescue deal engineered by the central bank in 2019.
“Regrettably, some significant legacy pains have eroded all the gains we have made,” KCB Group chairman Joseph Kinyua told the investor briefing, referring to efforts to turn NBK around.
KCB had initially indicated it was invested in NBK for the long haul. However, narrowing capital adequacy ratios in the last two years may have prompted a rethink, said Eric Musau, head of research at Nairobi-based Standard Investment Bank.
NBK’s core capital to risk-weighted asset ratio was 6.9% at the end of September, below the minimum requirement of 10.5%.
“They would have needed to recapitalise NBK,” Musau said.
KCB, which posted a 15% drop in pretax profit last year to 48.5 billion Kenyan shillings ($367.4 million), said it would not pay a dividend for the period in order to conserve capital. NBK was the only subsidiary in the group, which posted a drop in revenue last year from 2022, Russo said.
The sale of NBK to Access will allow the investments KCB has made in the business over the last four years to be preserved, Russo added.
KCB Group has acquired banks in other markets in the region in recent years, including an 85% stake in Trust Merchant Bank in the Democratic of the Congo, completed in late 2022, which has put further pressure on its own reserves.
