KCB boss to head National Bank team

KCB Group Chief Executive Joshua Oigara at a past event. [File, Standard]
The KCB Group Chief Executive Joshua Oigara will head the transition team guiding the purchase of National Bank of Kenya (NBK) as the deal enters homestretch.

This leaves the future of NBK boss Wilfred Musa in limbo. KCB this week served NBK with the offer document, expecting a response within 14 days. The process is expected to be completed by September this year.

“KCB and NBK have jointly set up a project team comprising of staff from both entities to mitigate transitional risks and make the necessary preparations to enable a smooth transition. The transition team will be led by the KCB Group CEO Joshua Oigara,” a press statement by KCB read.

Those close to the deal say KCB has taken the key role since it will determine the future of NBK management when the deal finally closes.

SEE ALSO :KCB half-year profit after tax jumps to Sh12.7 billion

Mr Musau, the NBK chief executive who took over from Munir Ahmed in 2016, and has led the lender through troubled times.

Central Bank of Kenya (CBK) Governor Patrick Njoroge said they support the takeover by KCB Group since NBK’s management was weak and unable to inspire confidence in attracting capital injection.

NBK has been operating below core capital since 2013, while a cursory look at its books show that core capital to deposits - the money the bank has stored to keep it functioning through all the risky transactions, has declined from 17 per cent of deposits in 2012 to a mere 2.1 per cent yet CBK requires a minimum of eight per cent.

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NBK bank received the intention-to-acquire letter from KCB on April 18, 2019, and an offeror’s statement to acquire 100 per cent of the ordinary shares of the company on May 6, 2019.

The merger will create Kenya’s largest bank by assets and market share with a balance sheet of Sh828 billion as per the two lenders’ December 2018 disclosures.

SEE ALSO :KCB Group confident of sealing NBK deal

“This transaction fits within KCB’s expansion strategy and gives it a stronger edge to play a bigger role in driving the financial inclusion agenda in the East African region.

This will further consolidate the banking sector in Kenya and will create a stronger institution enabling KCB to play a bigger role in the financial inclusion agenda,” said Oigara.

NBK and KCB shareholders have approved the deal that is now expected to move to valuation of the lender where details in the takeover bid document will be reviewed.

Under the proposal, NBK shareholders will get a single share of KCB for every 10 held, given that KCB shares are trading at Sh39.60, NBK’s shares would be valued at about Sh1.3 billion. The transaction is subject to regulatory approvals from the Capital Markets Authority, the Competition Authority of Kenya and CBK.

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Joshua OigaraKCBNBKCentral Bank of KenyaWilfred Musa