- NSSF, which owns a 48.05 per cent stake in the NBK, has finally offered the tier II capital after mulling over the lender’s loan request for about a year.
- The NSSF’s capital injection is likely to jolt KCB’s reported plan to acquire 70 per cent of National Bank via a share swap deal — buying out the stake held by the public pension and the Treasury.
National Bank #ticker:NBK on Monday received a Sh2.9 billion shareholder loan from the National Social Security Fund amid reports that KCB Group #ticker:KCB plans to acquire a majority stake in the troubled mid-tier lender.
The State-run pension scheme, which owns a 48.05 per cent stake in the NBK, has finally offered the tier II capital after mulling over the lender’s loan request for about a year.
NBK chief executive Wilfred Mutuku Musau steered clear of the proposed takeover, only saying the bailout would help shore up the bank’s capital ratios that have already slipped below regulatory requirements.
“We are grateful to our shareholders and board of directors for making available the capital to assist propel the bank’s growth. This shows the level of confidence NSSF and other shareholders have in the future of National Bank,” he said. “It is not convertible to equity.”
Mr Musau declined to divulge details on the tenor and pricing of the shareholder loan.
The Treasury directly owns 22.5 per cent of the bank, and is expected to chip in a prorated Sh1.4 billion.
The NSSF’s capital injection is likely to jolt KCB’s reported plan to acquire 70 per cent of National Bank via a share swap deal — buying out the stake held by the public pension and the Treasury.
NBK’s total capital to total risk-weighted assets ratio stood at 11.6 per cent as at March 2017, which is 2.9 percentage points below the Central Bank of Kenya statutory minimum of 14.5 per cent.
The State-backed lender first breached the ratio — crucial for the bank to grow its loan book — in March, 2016, when it fell short by 1.4 per cent after remaining compliant by a razor-thin margin for several quarters.
NBK in June last year turned to the NSSF and the Treasury to inject a Sh4.4 billion shareholder loan as a fallback plan following the collapse of a planned Sh13 billion rights issue.
KCB Group is yet to lodge the takeover bid of National Bank with the Capital Markets Authority.
Analysts at Genghis Capital estimate that KCB needs to issue about 38 million shares to the NSSF and the Treasury to assume ownership of their holdings in NBK.
The two will then control about 24.6 per cent of KCB.
NBK’s shares Monday rallied 10 per cent to close at 7.65 per share while KCB’s counter fell 3.1 per cent to close at Sh38.75.
“Overall, our key risk remains exposure of KCB to significant corporate governance issues that NBK has had over the years,” said Genghis in a research note.