National Bank of Kenya (NBK) workers face the possibility of losing their jobs two years into the proposed merger with KCB Group, a shareholders’ circular on the ongoing transaction has revealed.
The planned redundancies are intended to make the merged entity more efficient, NBK said in the letter sent Tuesday to its shareholders.
NBK will operate independently for two years after the Sh5.6 billion share swap transaction and then merge with KCB, at which point the reduction of NBK’s staff count of 1,356 workers is set to start.
National Bank of Kenya (NBK) #ticker:NBK workers face the possibility of losing their jobs two years into the proposed merger with KCB Group #ticker:KCB , a shareholders’ circular on the ongoing transaction has revealed.
The planned redundancies are intended to make the merged entity more efficient, NBK said in the letter sent Tuesday to its shareholders.
NBK will operate independently for two years after the Sh5.6 billion share swap transaction and then merge with KCB, at which point the reduction of NBK’s staff count of 1,356 workers is set to start.
“KCB will among other things conduct a review of the organisational structure to improve the management and operations of NBK from an efficiency as well as product view point,” said NBK in the circular.
“The reorganisation will lead to an overall reduction of the workforce and optimisation of the distribution network.”
NBK does not say how many jobs are expected to be lost in the merger. KCB is expected to make its own disclosures to its shareholders regarding the transaction, which will also disclose its staffing plans after its merger with NBK. KCB has a staff count of 6,220.
Besides the KCB/NBK merger, the tie-up of NIC Group #ticker:NIC and CBA Group is also expected to result in job losses.
The Competition Authority of Kenya (CAK) offered CBA and NIC employees protection from sacking for one year after which the newly-merged entity will be free to trim its workforce.
Mergers ordinarily come with overlaps of branch networks, technology, management and support functions.
The planned layoffs at NBK will build on the lender’s recent retrenchments that were carried out in a bid to cut costs and enhance efficiencies.
NBK laid off a total of 112 employees who took up a voluntary early retirement offer last year, costing the lender Sh541.2 million.
The retrenchments affected management ranks the most, with their number dropping to 721 from 791 in 2017. The number of clerical workers also declined to 432 from 494 while contract employees shrunk to 203 from 214.
The lender saw its cost-to-income ratio rise to 74 percent last year, one of the highest in the industry, from 67 percent the year before.
KCB and NBK have branches close to each other in multiple locations.
NBK says the merger is intended to solve its weak capital position. The bank, which has fallen short of most of the minimum capital requirements, will end up with a 4.5 percent stake in KCB.
KCB plans to invest up to Sh7.5 billion in NBK to shore up its capital and fund its growth ahead of the merger.
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