Access Bank’s move to acquire the National Bank of Kenya (NBK) marks a significant development in the banking landscape, with the deal valued at approximately KSh13.2 billion ($99.6 million). Under the terms of the agreement, Access Bank will pay 1.25 times the book value of NBK, which stood at around KSh10.57 billion ($79.28 million) as of December 2023.
The acquisition entails Access Bank purchasing all shares of NBK, subject to regulatory approvals from both Kenyan and Nigerian authorities. This strategic move underscores Access Bank’s commitment to expanding its presence in the East African market and consolidating its position as a leading financial institution on the continent.
KCB Group, which previously acquired NBK in a rescue deal orchestrated by the Central Bank of Kenya (CBK) in 2019, faced challenges in revitalizing the state-controlled medium-sized lender. Despite initial efforts to turnaround NBK’s operations, legacy issues impeded progress, leading KCB Group to reconsider its investment strategy due to narrowing capital adequacy ratios over the past two years.
The announcement of NBK’s sale coincides with KCB Group reporting an 8.3% decline in full-year net profit to KSh37.46 billion ($280.95 million) from KSh40.83 billion ($306.23 million). This decline in profitability can be attributed to various factors, including increased staff costs following the consolidation of Trust Merchant Bank (TMB) in the Democratic Republic of Congo (DRC) into KCB Group’s operations.
Furthermore, KCB Group’s decision to forgo dividends for the first time in 21 years reflects a strategic move to preserve capital, particularly for KCB Bank Kenya. This prudent measure aligns with the bank’s long-term sustainability goals amid evolving market dynamics and economic uncertainties.
Meanwhile, Access Bank’s recent acquisition of a majority stake in Finance Trust Bank in Uganda further demonstrates the Nigerian lender’s expansion strategy in the East African region. With an 80% ownership stake in Finance Trust Bank, Access Bank is poised to capitalize on growth opportunities and strengthen its foothold in the Ugandan banking sector.
Overall, Access Bank’s acquisition of NBK and its strategic investments in East Africa underscore its vision to become a dominant player in the region’s banking industry, leveraging synergies and market opportunities to drive sustainable growth and value creation for stakeholders.
Source: TechPoint