Former National Bank owners gain Sh1.7bn in KCB share rally
A National Bank branch in Nairobi. FILE PHOTO | NMG
What you need to know:
KCB issued 142.9 million new shares to the investors, including the National Social Security Fund (NSSF) and the National Treasury on October 4.
The stocks were valued at a total of Sh5.9 billion based on KCB’s closing price of Sh41.85 on that day.
The share price has subsequently rallied to hit highs of Sh54 on Friday on the government’s move to repeal lending rate controls, inflating the value of the stake held by former NBK investors to Sh7.7 billion.
Former shareholders of National Bank of Kenya (NBK) #ticker:NBK have recorded major gains in the KCB #ticker:KCB stocks they were given in their share swap buyout by the country’s biggest bank.
KCB issued 142.9 million new shares to the investors, including the National Social Security Fund (NSSF) and the National Treasury on October 4.
The stocks were valued at a total of Sh5.9 billion based on KCB’s closing price of Sh41.85 on that day.
The share price has subsequently rallied to hit highs of Sh54 on Friday on the government’s move to repeal lending rate controls, inflating the value of the stake held by former NBK investors to Sh7.7 billion.
This represents a paper gain of nearly 30 percent or more than Sh1.7 billion in a month. KCB’s share price performance means the deal is providing almost immediate benefits to the ex-NBK owners.
The merger was completed by swapping one KCB share for 10 NBK shares. KCB says it plans to fully integrate NBK within two years.
KCB is yet to issue an additional 4.4 million shares in connection with the NBK buyout, awaiting a few legal steps.
The deal allows former NBK owners, who had gone for years without dividends and suffered major paper losses, to ride the coattails of the country’s biggest bank by assets and absolute profits.
NBK’s profitability was weak relative to its size, a trend that was linked to a legacy of poor management including corruption and inefficiencies.
KCB has reorganised NBK’s board of directors and top management, indicating its focus on cleaning up the bank’s top leadership.
The lender recently appointed its director for regional businesses Paul Russo as the new managing director for NBK where he replaced Wilfred Musau.
For KCB, the acquisition of NBK was part of its plan to further boost its economies of scale in the local market. The bank also signed a deal to take over Sh4 billion of deposits from the collapsed Imperial Bank.
In its offer to NBK investors, KCB dangled its financial strength and returns to shareholders.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
