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KCB completes buyout of National Bank owners

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National Bank MD Paul Russo during the opening of a branch at Gikomba on March 10, 2020. PHOTO | DIANA NGILA

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Summary

  • NBK shareholders were to take a total of 147.3 million shares in the country’s biggest bank in the transaction.
  • A majority of them agreed to the deal and were allotted 142.9 million KCB shares on October 4, 2019.
  • The holdouts were subsequently notified of the compulsory buyout which has now been concluded.

KCB Group #ticker:KCB has completed the compulsory buyout of dissenting minority shareholders of National Bank of Kenya (NBK) after issuing 4.4 million of its shares currently worth Sh212 million to the holdouts.

NBK shareholders were to take a total of 147.3 million shares in the country’s biggest bank in the transaction.

A majority of them agreed to the deal and were allotted 142.9 million KCB shares on October 4, 2019.

The holdouts were subsequently notified of the compulsory buyout which has now been concluded, according to KCB’s disclosure of its December 2019 shareholder list.

KCB has, however, ended up with 15,360 more shares than it said it would have after buying out all the former NBK investors. The extra shares have a current market value of about Sh740,000.

The lender said it could not comment immediately on the variance in the number of outstanding shares.

In the takeover, investors including the Treasury and the National Social Security Fund (NSSF) participated in the stock swap at a rate of 10 NBK shares for one in KCB.

Without the compulsory buyout, the dissenting minority investors would have been left holding shares that could not trade on the NSE.

KCB injected Sh5 billion of new capital into NBK in December to recapitalise the bank which had breached critical capital ratios for years.

KCB earlier estimated that NBK would need up to Sh7.5 billion in new capital but the amount was subject to change.

With a stronger balance sheet, NBK can now take in more deposits and expand its lending, a move that is expected to help it contribute to KCB’s consolidated earnings in the coming years.

NBK, whose results will be consolidated into KCB, reported a surprise earnings jump in the nine months ended September 2019. Its net profit rose 18.5 times to Sh407 million on the back of higher interest income and lower expenses.