Nigerian Access Bank Plc has inked a formal agreement to buy the National Bank of Kenya (NBK) from KCB Group Plc. The purchase is contingent on Central Bank of Kenya regulatory approvals, according to a bank tweet.
In a 2019 central bank-facilitated rescue deal, Kenya’s second-largest lender, KCB, bought state-controlled medium-sized lender NBK. Initial reports said KCB was investing in NBK in the long term. The last two years’ narrowing capital adequacy ratios may have triggered a reassessment, said Eric Musau, head of research at Nairobi-based Standard Investment Bank, to Reuters.
Access Bank said it would expand in the country and capitalize on regional trade by acquiring the NBK.
The lenders signed the purchase deal today, Wednesday. As part of the deal, KCB will sell all of its shares in NBK for 1.25 times their book value. Executive Chairman of KCB Group, Paul Russo, told investors the deal should go through in the next six to nine months. After the deal was announced, KCB Group’s stock increased by 9.9%.
In Kenya, this is Access Bank’s second purchase. Additionally, in 2019, the Nigerian bank bought the Transnational Bank Limited.
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What the deal brings NBK
With this transaction, National Bank of Kenya Limited customers may expect a smooth transfer and improved banking. Access Holdings’ resources, knowledge, and technology should boost customer service, digital banking, and operations.
This merger will also offer new prospects to both institutions’ staff. Access Holdings is known for talent development and professional progress, which bodes well for the combined entity’s staff.
Access Holdings and National Bank of Kenya Limited executives were optimistic about the deal. They are committed to solid service standards, innovation, and financial inclusion in Kenya.
Access Holdings’ acquisition of National Bank of Kenya Limited marks a new era for Kenya’s banking system. It symbolizes a strategic goal for growth, modernization, and customer happiness, promising beneficial changes for customers, employees, and the nation’s finances.
Access Bank Expands in Africa
The Nigerian bank, which has stated that it intends to outgrow competition from other financial institutions on the continent, as well as the fintech companies that are rapidly scaling up in its home market, plans to double the share of assets outside of its home market by 2027.
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The agreement also expands the bank’s expanding activities in Rwanda and the Democratic Republic of the Congo, as well as its plans to purchase shares in Finance Trust Bank Limited in Uganda in January, a majority stake in African Banking Corporation of Tanzania, and the consumer, private, and business banking operations of Standard Chartered Bank Plc in Tanzania.
Access Bank has acquired Grobank in South Africa, BancABC in Botswana and Mozambique, Diamond Bank in Nigeria, and Finibanco Angola across the continent.
“The transaction represents an important milestone for the bank as it moves us closer to our five-year strategic plan through a higher Kenyan market scale.”Access Bank CEO Roosevelt Ogbonna stated
Paul Russo, CEO of KCB Group, believes the loan sale to Access Bank will improve the struggling business. Kenya’s largest bank, KCB, bought the National Bank in 2019.
“The board evaluated three options and decided that to protect the value and the efforts we’ve put in NBK, the right thing to do is to accept a binding offer from Access Group,” Russo said while releasing KCB Group’s 2023 financial results.