KCB Group completes buyout of National Bank as it opens new branch

KENYAKCB Group, a financial service provider, has completed the compulsory buyout of dissenting minority shareholders of National Bank of Kenya (NBK) after issuing 4.4 million of its shares currently worth KSh212 million (US$2.12m) to the holdouts.

According to Business Daily, NBK shareholders were to take a total of 147.3 million shares in the country’s biggest bank in the transaction.

A majority of them agreed to the deal and were allotted 142.9 million KCB shares on October 4, 2019.

The holdouts were subsequently notified of the compulsory buyout which has now been concluded, according to KCB’s disclosure of its December 2019 shareholder list.

KCB has, however, ended up with 15,360 more shares than it said it would have after buying out all the former NBK investors. The extra shares have a current market value of about KSh740,000 (US$7,400).

The lender said it could not comment immediately on the variance in the number of outstanding shares.

In the takeover, investors including the Treasury and the National Social Security Fund (NSSF) participated in the stock swap at a rate of 10 NBK shares for one in KCB.

Without the compulsory buyout, the dissenting minority investors would have been left holding shares that could not trade on the NSE.

KCB injected KSh5 billion (US$50m) of new capital into NBK in December to recapitalise the bank which had breached critical capital ratios for years.

KCB earlier estimated that NBK would need up to KSh7.5 (US$75m) billion in new capital but the amount was subject to change.

With a stronger balance sheet, NBK can now take in more deposits and expand its lending, a move that is expected to help it contribute to KCB’s consolidated earnings in the coming years.

NBK, whose results will be consolidated into KCB, reported a surprise earnings jump in the nine months ended September 2019. Its net profit rose 18.5 times to KSh407 million (US$4.07m) on the back of higher interest income and lower expenses.

National Bank of Kenya (NBK) has opened its first branch since its acquisition by Kenya (KCB) Group

Located in Gikomba Market, the branch is one of the 4 branches that the bank is gearing to set up.

It brings to 83 the total number of branches that the bank has spread across the country. 

“These new branches are part of our strategy for turning around the bank and setting it on the growth path. In this regard, we are reinvigorating our physical presence even as we revamp our digital channels,” the bank’s Managing Director Paul Russo said.

“All this is geared towards ensuring that we consistently deliver an unmatched experience to our customers through bespoke financial solutions.”

“We are betting on small and medium-sized businesses in this country. We would like to partner with the business community in Gikomba and the rest of the country to enable them to thrive, create jobs and deliver other economic benefits. We have a robust suite of innovative financial solutions, attuned to needs of businesspeople,” the Director of Retail Banking at National Bank, Cromwell Kedemi said.

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