Access Bank has disclosed that it will acquire the National Bank of Kenya from the KCB Group, its second acquisition of a Kenyan bank in under five years.
Access Bank had in 2019 acquired another Kenyan bank, Transnational Bank Limited.
Sunday Ekwochi, Access Holdings’ Secretary, announced in a statement filed on the Nigerian Exchange Limited on Wednesday that the deal’s finalisation is contingent upon receiving regulatory approvals from the Central Banks of Kenya and Nigeria.
The statement read, “Access Holdings Plc (“Access Holdings”) today announces that its flagship subsidiary, Access Bank Plc (“Access Bank” or “the Bank”) has entered into a binding agreement with Kenyan-based KCB Group Plc (“KCB”) for the acquisition of the entire issued share capital of National Bank of Kenya Limited (“NBK” or ‘the Target’’) from KCB. (‘the Transaction’) KCB is also the holding company of KCB Bank Ltd, Kenya’s largest commercial bank.”
“The Transaction is in furtherance of the Bank’s African expansion strategy and will reposition it as a stronger and significant player in the Kenyan market whilst serving as a regional hub for our East African bloc anchored by a solidified balance sheet.
“The parties will be working together in the coming months to fulfil the conditions precedent relating to the Transaction, which include the regulatory approvals of the Central Bank of Nigeria and the Central Bank of Kenya.
“Sequel to the completion of the Transaction, the Target would be combined with Access Bank Kenya Plc to create an enlarged franchise in the pursuit of our strategic objective for the Kenyan and East African markets.”
Ms. Bolaji Agbede, Acting Group Chief Executive Officer of Access Holdings Plc, while commenting on the transaction, said, “This proposed acquisition marks a significant step in the execution of our five-year strategic plan aimed at positioning the Bank as Africa’s Gateway to the World.
“The deal with NBK, a historically strong and well-known bank in Kenya with a balance sheet in excess of US$1.1 billion, presents a compelling opportunity to scale up our growth in the East African market.
“We remain confident that our investments towards diversifying and strengthening the Bank’s long-term earnings profile will deliver significant value for our shareholders, customers, and wider stakeholder groups.”
Meanwhile, Reuters reported Wednesday evening that Kenya’s KCB Group (KCB.NR), has agreed to sell its subsidiary National Bank of Kenya (NBK) to Nigeria’s Access Group, KCB’s chief executive said on Wednesday.
Paul Russo told an investor briefing the deal was struck at 1.25 times book value but did not give the exact figure.
“The right thing to do is to accept a binding offer from Access Group,” he said.
KCB Group shares were up 9.9% following news of the deal.
Access, which already runs a small unit in Kenya after the Transnational Bank acquisition in 2019, said the acquisition of NBK would help it to expand in the country and take advantage of growing trade in the region.
KCB, Kenya’s second-biggest lender, bought NBK, a medium-sized lender that was then controlled by the state, in a rescue deal engineered by the Central Bank in 2019.
“Regrettably, some significant legacy pains have eroded all the gains we have made,” KCB Group chairman Joseph Kinyua told the investor briefing, referring to efforts to turn NBK around.
KCB had initially indicated it was invested in NBK for the long haul. However, narrowing capital adequacy ratios in the last two years may have prompted a rethink, said Eric Musau, head of research at Nairobi-based Standard Investment Bank.
NBK’s core capital to risk-weighted asset ratio was 6.9% at the end of September, below the minimum requirement of 10.5%.
“They would have needed to recapitalise NBK,” Musau said.
KCB, which posted a 15% drop in pretax profit last year to 48.5 billion Kenyan shillings ($367.4 million), said it would not pay a dividend for the period to conserve capital.
NBK was the only subsidiary in the group, that posted a drop in revenue last year from 2022, Russo said.
The sale of NBK to Access will allow the investments KCB has put in the business over the last four years to be preserved, Russo added.