A National Bank branch in Nairobi. FILE PHOTO | NMG
Former shareholders of National Bank of Kenya (NBK)
Summary
- 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.
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.
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