KCB sells its loss-making National Bank as profit dips
Business
By
Brian Ngugi
| Mar 21, 2024
Kenya's largest lender by asset size KCB Group will sell its loss-making subsidiary National Bank of Kenya (NBK) to Nigeria's largest lender Access Bank.
The deal, whose financial value was not made public by the two lenders by press time, yesterday, will see Access Bank buy 100 per cent of the troubled NBK subject to regulatory approval.
The deal will enable KCB to offload the troubled NBK which has been dragging its performance after a successful acquisition in 2019.
KCB Group yesterday announced its profit for the year ended December dropped by 8.27 per cent or the equivalent of Sh3.3 billion to Sh37.4 billion on higher costs. It will be a dividend drought for shareholders as KCB did not announce a dividend.
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"This transaction represents what we believe is a great opportunity to maximize value for our shareholders while strengthening the competitive position of the Group. The past four years have been defining for NBK as a KCB Group subsidiary and this step marks the opening of new opportunities," said KCB Group CEO Paul Russo yesterday.
"During the period, we have made progressive investments in the Bank, and we believe that this is in the best interest of the Group and its sustainability."
Access Bank said earlier it is hungry for more acquisitions in the country's vibrant banking sector despite its botched takeover of Centum-owned Sidian Bank.
Commenting on the transaction, Access Bank Chief Executive Roosevelt Ogbonna said the transaction represents an important milestone for the Bank as it expands in the Kenyan market.
"We are building a strong and sustainable franchise to support economic prosperity, encourage African trade, and advance financial inclusion thereby empowering many to achieve their financial dreams," said Ogbonna.
Access Bank has been expanding across Africa to counter stagflation and dollar shortages in Nigeria that have frustrated businesses, shrinking the lending market.
"The bank remains committed to growing its franchise in a safe and sound manner in Kenya and the broader East African Community and will continue to explore a variety of organic and inorganic opportunities to grow its market share therein," said the lender earlier following The Standard queries.
The Sh4.3 billion transaction would have been the second acquisition in Kenya for Access Bank, which acquired Transnational Bank, now called Access Bank Kenya, in 2020.
Access Bank acquired a 99.98 per cent stake in Transnational Bank and paid Sh1.21 billion in cash in early 2020 for a deal valued at Sh1.56 billion.
The buyout by Access Bank deepened the presence of Nigerian banks in Kenya, with United Bank of Africa (UBA) and Guarantee Trust Bank already in the market.
The Kenyan banking sector has witnessed increased interest in the last seven years, with mergers and acquisitions happening.
Other lenders that have been acquired in the last few years include Fina Bank, K-Rep, Equatorial Commercial Bank, Giro Commercial Bank, Oriental Commercial Bank, Fidelity Bank, Habib Bank, Chase Bank, Mayfair Bank and Jamii Bora Bank.