KCB notifies National Bank owners of forcible buyout

KCB chief finance officer Lawrence Kimathi: We have issued the notice. PHOTO | SALATON NJAU | NMG 

By VICTOR JUMA
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Summary

• Some NBK investors declined to subscribe to KCB’s share swap deal.
• They will now be forced to become owners in the country’s biggest bank.
• This will see KCB issue an additional 4.4 million shares worth about Sh200 million on top of the 142.9 million units it had allotted to the first group NBK shareholders who accepted its deal.

KCB Group will complete the compulsory buyout of dissenting minority shareholders of National Bank of Kenya (NBK) later this month.

Some NBK investors declined to subscribe to KCB’s share swap deal but will now be forced to become owners in the country’s biggest bank.

This will see KCB issue an additional 4.4 million shares worth about Sh200 million on top of the 142.9 million units it had allotted to the first group NBK shareholders who accepted its deal.

“We have issued the compulsory takeover notice to the minority NBK shareholders,” said Lawrence Kimathi, KCB’s chief finance officer.

“We are halfway through the 21-day notice period and the squeeze-out will be complete by the end of this month.”

In the takeover, investors including the National Social Security Fund (NSSF) participated in the stock swap at a rate of 10 NBK shares for one share in KCB.

Without the compulsory buyout, the dissenting minority investors would have been left holding shares that could not trade on the NSE.

The country’s largest lender is set to inject new capital into NBK once it takes full ownership of the lender which will also be de-listed from the Nairobi Securities Exchange (NSE).

NBK’s core capital fell below the statutory minimum of Sh1 billion in the nine months ended September, adding to its historical breaches of various capital ratios.

The lender’s core capital stood at Sh993.7 million in the review period. Mr Kimathi said KCB is reviewing NBK’s capital requirements, taking into account various factors, including the rate of loan recoveries.

“NBK will be compliant in terms of capital by the end of the year,” Mr Kimathi said.

KCB estimated that NBK will need up to Sh7.5 billion in new capital but the amount is subject to change.

NBK, whose results will be consolidated into KCB going forward, reported a surprise earnings jump in the nine months ended September.

Its net profit rose 18.5 times to Sh407 million on the back of higher interest income and lower expenses. Exceptional items, for instance, shrank by Sh411.2 million to Sh124.2 million.

Interest income increased by Sh298.2 million to Sh6.6 billion. NBK’s loan book and customer deposits dropped in the review period, continuing the downward trend over the past few years.