KCB Group is selling its local subsidiary, the National Bank of Kenya (NBK). This sale is set to take place less than five years after KCB Group acquired the National Bank.
This sale has been revealed by local business newspaper, Business Daily, which is owned by the Nation Media Group. It was not immediately clear what informed the decision by KCB Group to sell National Bank.
According to the newspaper, KCB Group will sell NBK to a Nigerian lender in what is expected to be a multi-billion deal.
The sale will happen at a time when KCB was expected to integrate its banking services with those of the National Bank.
This would have meant that customers of the NBK and KCB Group would be able to access banking services in either of the two banks’ branches.
These interbank services were set to start within the first quarter of 2024. “January-February, KCB customers should be able to be served in an NBK branch and NBK customers in a KCB branch. That gives you an opportunity to optimize because you can then remove overlaps,” KCB Group chief executive officer Paul Russo had said in November when he released the bank’s quarter three results.
KCB Group acquired the NBK in October 2019. To complete the acquisition, KCB Group issued 147.3 million shares worth an estimated Sh. 6 billion to the then National Bank shareholders who included the National Treasury and the National Social Security Fund (NSSF).
Strengthening Kenya shilling inches closer to 120s against the US dollar
This deal was spearheaded by the National Treasury and the Central Bank of Kenya in what was perceived as a rescue mission for the National Bank.
According to the report in the newspaper, KCB invested heavily in a bid to turn the fortunes of the National Bank around. As at September 2023, the KCB was estimated to have pumped Sh. 12.5 billion into NBK. This investment involved debt and equity capital.
However, this Investment took a hit in 2023 when NBK returned a net loss in the period ended September 2023. The bank recorded a Sh. 2.97 billion in loss after tax for the period ending 30 September 2023 compared to a net profit of Sh. 964.15 million in a similar period the previous year.
The lender attributed the downward trajectory to one-off costs associated with legal matters, staff voluntary early retirement program in the first half of the year and an increase in loan loss provisions which has strained its incomes.
One of these legal matters involved the payment of Sh. 2.3 billion to former Taveta Member of Parliament Basil Criticos. This payment was compensation for NBK’s decision to auction Criticos’ sisal farm about 16 years ago.