National Bank of Kenya Ltd (NBK) shareholders have finally endorsed the conditional conversion of preference shares into ordinary shares upon the completion of a proposed take-over bid by KCB Group or a competing bid.
The move now clears the way for KCB to now seek approval from Central Bank of Kenya (CBK).
Following the approval, KCB will now acquire up to 100 per cent of the ordinary shares of NBK through a share swap of one ordinary share of KCB for every 10 ordinary shares of NBK.
According to NBK shareholding, the two principal shareholders – Treasury (GoK) and National Social Security Fund (NSSF) – have The Offer requires that the 1.14 billion preference shares which will now be converted on a one/one basis into 1.14 billion new ordinary shares at the completion of the Take Over Bid.
NBK chairman Mohamed Hassan said the bank remains a strong institution with supportive shareholders and customers. The bank also receives significant support from regulators.
“The management and staff of NBK have our full support as they continue to deliver solutions to customers. The preservation of value remains the most important tenet for all the stakeholders and the board is working with management to ensure that ongoing business initiatives continue unabated,” said Hassan.
According to him, after the acquisition of the bank, NBK will continue to operate as a separate subsidiary of KCB (for a while) and, therefore, service delivery to its customers will remain uninterrupted.
Hassan said the combined balance sheets of the two banks will increase their capital capacity. According to Capital Markets Regulations (Take-Overs and Mergers, 2002), NBK shareholders should receive a detailed Take-Over Bid document by KCB in due course.
Simon Githuku, from Kenya Association of Manufacturers says the merger is significant as it will increase the competitive intensity of the banking sector and primarily Tier 1 banks. After the merger, the two banks will have a market capitalisation of Sh569.8 billion.
As at the end of the 2018 financial year, KCB had loans and advances amounting to Sh455 billion – beating Equity Group, NIC-Commercial Bank of Africa and NBK, which had Sh297.2 billion, Sh239.6 billion and Sh47.7 billion respectively.
Regulatory approvals from, amongst others, the CMA, CBK and the Competition Authority of Kenya are also key in the takeover.