NBK gets relief in Sh500m debt tussle with Ecobank

What you need to know:

A bench of three judges ruled that the appeal by NBK was arguable and the amount in contention quite substantial, and which was likely to occasion considerable hardship to NBK, especially if the appeal succeeds.
NBK moved to the Appellate court after High Court judge Grace Nzioka directed it to pay Sh549.3 million based on an agreement signed three years ago.
The judge said NBK should pay Ecobank on account of Pesa Print Ltd, a firm it (NBK) subcontracted to supply the digital driving licences to the National Transport and Safety Authority (NTSA).

The National Bank of Kenya #ticker:NBK (NBK) has won a temporary reprieve after the Court of Appeal halted a demand for payment of over Sh500 million to Ecobank arising from a financing deal linked to the supply of digital driving licences to a State agency.

A bench of three judges ruled that the appeal by NBK was arguable and the amount in contention quite substantial, and which was likely to occasion considerable hardship to NBK, especially if the appeal succeeds.

“On the other hand, as both the applicant (NBK) and respondent (Ecobank) are reputable banking institutions, it is in the interest of justice that the intended appeal be filed and determined on the basis of priority and we so direct,” Justices Martha Koome, Daniel Musinga and Gatembu Kairu ruled.

NBK moved to the Appellate court after High Court judge Grace Nzioka directed it to pay Sh549.3 million based on an agreement signed three years ago.

The judge said NBK should pay Ecobank on account of Pesa Print Ltd, a firm it (NBK) subcontracted to supply the digital driving licences to the National Transport and Safety Authority (NTSA).

Under the deal, NBK had committed to pay Ecobank within 150 days after inking the licence deal for a loan the lender had offered Pesa Print, to kick-start production of the 202,100 second generation smart card driving licences.

But NBK argues in the appeal that the High Court judge was wrong for misconstruing the meaning of “receivables” and it only had to pay Ecobank after receiving money from NTSA.