The Kenya Commercial Bank Group (KCB Group) has issued a warning to investors and shareholders following the sale of its subsidiary, National Bank of Kenya (NBK).
In a March 20, 2024, cautionary announcement, the lender noted that it has initiated the process of a complete sale of NBK to Nigerian Access Bank Plc.
“The Board of Directors of KCB Group Plc (KCB) wishes to advise shareholders and investors that on 20 March 2024, KCB entered into a share purchase agreement (“Agreement”) with Access Bank Plc (Access Bank), which, if the proposed transaction is successfully completed, would result in Access Bank acquiring 100% of the issued ordinary shares in National Bank of Kenya Limited (NBK) from KCB,” read part of the announcement.
KCB noted that the completion of the proposed transaction is however subject to conditions that are customary for transactions of this nature.
These conditions include but not limited to, receipt of all regulatory approvals from, amongst others, the Central Bank of Kenya (CBK), the Central Bank of Nigeria, and the COMESA Competition Commission.
Also, a non-mandatory approval from the Capital Markets Authority of Kenya (CMA) and notifications to other relevant regulators are some of the other conditions listed.
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It is upon the completion, that the National Bank of Kenya will become a subsidiary of Access Bank of Nigeria.
KCB warns shareholders & investors
Pending completion of the proposed transaction, the shareholders of KCB and other investors were advised to exercise caution when dealing in its shares on different stock markets.
These include the Nairobi Securities Exchange (NSE), the Uganda Securities Exchange, the Rwanda Stock Exchange, and the Dar es Salaam Stock Exchange.
The National Bank of Kenya (NBK) is a public company limited by shares duly incorporated and registered in Kenya (registration number C.13/94).
NBK, which was previously controlled by the state, is a medium-sized lender that was acquired by KCB in a rescue deal engineered by the CBK back in 2019.
Since acquiring NBK, the second-biggest lender in the country has struggled to fix the many issues it inherited, which include non-performing loans and significant capital constraints.
The lender in the half -year 2023 financial results recorded a significant decline of 17.9 per cent of profit after tax.
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KCB Group recorded a Profit After Tax of Ksh16.1 billion, a decline compared to the same period in 2022, which recorded Ksh19.6 billion.
Losses & Profits
It attributed the decline to multiple factors, including a Ksh3.8 billion loss in National Bank, which has been the banking group’s only non-performing subsidiary.
Additionally, KCB Group CEO Paul Russo during an investor briefing on March 20, 2024, reported a net profit of Ksh37.5 billion in the full year ending December 2023.
This was however still a net profit drop of eight percent (Ksh3.3 billion) from Ksh40.8 billion registered in 2022, attributed to increased costs and shilling depreciation.
On the other hand, the group recorded a 27 per cent revenue increase to Ksh165.2 billion, which Russo attributed to growth of e-banking and access to new markets.
The company further noted that the announcement of the sale of its National Bank subsidiary was meant for informational purposes only.
“It is not intended to constitute, and may not be construed as, a public offering it has been issued with the approval of the Capital Markets Authority pursuant to the Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations 2023,” said KCB.
According to the company, CMA assumes no responsibility for the correctness of the statements appearing in the announcement as a matter of policy.
KCB Group Plc is a non-operating holding company engaged in the provision of corporate, investment and retail banking services through its subsidiaries.
Access Bank on the other hand is a public company incorporated under the laws of Nigeria which operates in Kenya via its subsidiary Access Bank Kenya Plc, formerly Transnational Bank Kenya Plc.
