National Bank issues advisory to shareholders on KCB takeover bid

National Bank of Kenya is currently the subject of a takeover bid by the KCB Group [Photo, Courtesy]

NAIROBI, KENYA: The board of National Bank (NBK) has issued an advisory circular to its shareholders to assist them to make an informed decision to accept or reject the offer from KCB group PLC to acquire the Bank.

The circular, which has been approved by The Capital Markets Authority, includes an independent advisors report and an acceptance form.

According to a statutory notice from National Bank published in the local dailies, the circular will be sent to all shareholders to their latest registered addresses and a copy uploaded on the company’s website

The issuance of the circular follows the serving of a takeover document by KCB group on June 19. The takeover document detailed material information from the offeror (KCB) on the bid to acquire a hundred percent (100 per cent) of National Bank’s ordinary shares upon re-designation of the Preference Shares into ordinary shares.

According to the circular, the Board recommends the Offer to the shareholders for consideration based on several factors.

In a letter to shareholders contained in the circular, the Chairman to the board Mr Mohamed Hassan partly states; “Furthermore, as previously advised to the shareholders although NBK remains a strong bank, it requires additional capital to meet regulatory capital requirements and to grow its business, which capital can be provided by KCB.”

Ultimately, shareholders are expected to make their own decision. The board has asked shareholders to utilize the detailed information to make a decision or seek the advice of stockbroker, investment advisor, accountant, banker, or other professional advisors.

According to the circular, the take-over bid from KCB has outlined several predicating factors. Some of the key factors include the proposal that National Bank will continue to operate as a separate subsidiary of KCB (for two years) and therefore service delivery to its customers will remain un-interrupted. Equally, the combined balance sheets of the two banks will increase the capital capacity of both banks.

The transaction is also subject to the procurement of regulatory approvals from, amongst others, the Capital Markets Authority, the Central Bank of Kenya, and the Competition Authority of Kenya.

KCB Group expects to complete its acquisition of National Bank of Kenya by October.

KCB, which also operates in Uganda, Tanzania, Rwanda, Burundi and South Sudan, February this year offered to buy National Bank (NBK) through a share swap of one KCB share for every 10 of NBK, joining a wave of consolidation in Kenya’s banking industry.

 The merged entity could have a balance sheet of 1 trillion shillings ($9.90 billion) by the end of 2022.

KCB had assets valued at Sh714.3 billion last year, while NBK had Sh114.8 billion worth of assets.