The Government has now thrown its weight behind Kenya Commercial Bank (KCB’s) bid to acquire loss-making National Bank of Kenya (NBK) a day after lawmakers directed the Treasury to reject the deal.
In a statement, Treasury CS Ukuru Yattani stated that the multibillion-shilling acquisition will yield positive results for both KCB and National Bank in order to support the bigger government agenda of strengthening the financial sector in Kenya.
“The Government as a shareholder has been engaged in the process. In our strategic role, we recognize the need for strong and stable banks for our fiscal responsibilities,” Yattani said.
He added that both KCB and NBK had already made a public announcement 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.
During a Parliament session, The Finance and National Planning Committee asked NBK’s principal shareholders – the National Treasury (22.5 percent) and the National Social Security Fund (NSSF) (48.05 percent) to reject KCB’s offer to acquire 100 percent shareholding.
The committee argued that the takeover deal undervalues NBK and is not in the best interest of workers, taxpayers, NBK staff and minority shareholders.
KCB’s valued NBK at Sh6 billion against an independent valuation of Sh9 billion. In their recommendation, the MPs wants the Treasury to fund the lender amid warnings by Central Bank of Kenya (CBK) that failure to rescue NBK would lead to its collapse.
“NBK is a strong bank with good asset value. The only challenge facing it is that of core capital and the total risk: weighted assets ratio, which is 2.4 percent, below the minimum statutory requirement of 10.5 percent,” the MPs stated.
The Sh5.8 billion share-swap deal, is already open for acceptance by shareholders, with the offer expected to close at the end of this month, KCB is seeking to acquire NBK through 10 for one shares swap.
Market regulator, Capital Markets Authority said success or failure of the takeover is fully dependent on the shareholders of both KCB and NBK.
“It is then up to the NBK shareholders to accept or reject the offer. If the threshold for acceptance is not met then the offer fails but if it is met it is deemed successful,” it stated.
Featured Image Courtesy: The Star
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