Kenya Backs KCB Group’s National Bank Bid Despite Valuation
Kenya Lawmakers Block KCB Group From Taking Over National Bank
(Bloomberg) -- KCB Group Ltd.’s bid to take over National Bank of Kenya is the best option for the state-controlled lender, acting Treasury Secretary Ukur Yatani said after a lawmakers’ committee moved to block the deal on valuation.
The National Assembly’s Finance and National Planning committee said Wednesday that NBK, as the lender is known, should consider a rights issue to boost its capitalization instead of being bought cheaply. NBK’s main shareholders, including the National Social Security Fund and National Treasury, are seeking ways to recapitalize the bank reeling from a non-performing loans ratio of 49%.
“It’s our view that there’s no better option than the merger given the situation at the NBK at the moment,” Yatani said by text message.
The takeover would be another banking tie-up in Kenya this year after NIC Group Plc and Commercial Bank of Africa Ltd. proposed a merger in January. The consolidation is in line with the central bank’s aspirations for a stronger banking sector for East Africa’s largest economy.
Call for Talks
KCB, the country’s largest lender by assets, seeks to acquire NBK at a valuation of 6 billion shillings ($58 million), one third below an independent assessment, according to a statement emailed by the committee’s Chairman Joseph Limo.
Aware of the lower valuation, NBK’s board still recommended last month that shareholders accept the bid in the absence of any other offer.
KCB has asked the lawmakers for talks on the transaction that it previously said could be concluded as early as September, subject to regulatory approvals. “NBK shareholders have already received the offer documents and we remain optimistic that we shall receive positive responses,” the lender said in an emailed statement.
NBK Chief Executive Officer Wilfred Musau couldn’t immediately comment when contacted.
KCB was up 0.5% by 4:37 p.m. in Nairobi, the capital.
To contact the reporter on this story: David Herbling in Nairobi at dherbling@bloomberg.net
To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, Michael Gunn
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