Kenya’s central bank has approved the sale of the National Bank of Kenya (NBK) to Access Bank by KCB Group, but the transaction is still pending because Nigeria’s national bank has not given its final approval.
The Central Bank of Nigeria (CBN) has attached to its approval two main requirements: Access Bank’s separation from its Democratic Republic of Congo (DRC) unit and a compliance examination of its London operations.
The planned departure of KCB is delayed by the cross-border regulatory deadlock, which also makes Access Bank’s regional expansion plan more difficult.
KCB to keep problematic loans
Certain NBK assets and liabilities are not included in the agreement structure, and KCB is anticipated to keep problematic loans.
Even though NBK generated a profit again in 2024, KCB is under pressure to sell off since its core capital ratio is still below the required level.
Access Bank’s East Africa expansion plan
After acquiring Transnational Bank, Access Bank, the biggest lender in Nigeria by assets, plans to use NBK to increase its presence in East Africa.
The sale, valued at Sh16.2 billion, is a component of Access Bank’s larger expansion initiative, which was supported by a recent capital issue of $228 million.
Difficulties faced by Nigerian banks in DRC
The CBN’s scrutiny coincides with the difficulties Nigerian banks encounter in the DRC, in contrast to their Kenyan counterparts, whose acquisitions of robust local banks have resulted in financial success.
Access Bank reports low returns, while Equity Bank and KCB Group report DRC earnings in the billions.
The regulatory bottleneck indicates a widening gap in East-West African banking policies and highlights the geopolitical frictions in cross-border banking.