KCB offer to buy National Bank welcome

The offer by KCB last week to take over National Bank of Kenya (NBK) is good news for the banking industry. For long, NBK has suffered under bad debts and scandals that have left its financial state in tatters. Management and board changes have been unable to clean up the lender’s books and image, resulting in a lukewarm relationship with the market.

The Government holds majority stakes in both banks, a pointer to the deal being a State intervention to save the troubled lender. If successfully completed it will create an entity valued at more than Sh900 billion and cement KCB’s position as the largest bank in the region. More important, it will offer NBK’s customers much-needed security for their deposits, standing at around Sh100 billion.

The National Treasury has on several occasions declared its wish to see more banks coming together to form larger units that are more stable. And there have been a few voluntary mergers and takeovers before this KCB move, including the pending finalising of a marriage between NIC Bank and Commercial Bank of Africa.

In the recent past, we have witnessed the collapse of Dubai and Imperial banks due to various financial and regulatory hiccups, with Chase Bank also placed under receivership. We would loathe to see another lender go down as this could lead to a lack of confidence in Kenya’s banking sector. It is therefore laudable that the initiators of the deal have stepped in at the right time before things got out of hand for NBK.

SEE ALSO :Decade-long haemorrhage that put National Bank on deathbed

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