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KCB Group will complete the compulsory buyout of dissenting minority shareholders of National Bank of Kenya (NBK) later this month.

Some NBK investors declined to subscribe to KCB’s share swap deal but will now be forced to become owners in the country’s biggest bank.
Without the compulsory buyout, the dissenting minority investors would have been left holding shares that could not trade on the NSE.

The country’s largest lender is set to inject new capital into NBK once it takes full ownership of the lender which will also be de-listed from the Nairobi Securities Exchange (NSE).

NBK’s core capital fell below the statutory minimum of Sh1 billion in the nine months ended September, adding to its historical breaches of various capital ratios.

The lender’s core capital stood at Sh993.7 million in the review period. Mr Kimathi said KCB is reviewing NBK’s capital requirements, taking into account various factors, including the rate of loan recoveries.

“NBK will be compliant in terms of capital by the end of the year,” Mr Kimathi said.

KCB estimated that NBK will need up to Sh7.5 billion in new capital but the amount is subject to change.

This will see KCB issue an additional 4.4 million shares worth about Sh200 million on top of the 142.9 million units it had allotted to the first group NBK shareholders who accepted its deal.

“We have issued the compulsory takeover notice to the minority NBK shareholders,” said Lawrence Kimathi, KCB’s chief finance officer.

“We are halfway through the 21-day notice period and the squeeze-out will be complete by the end of this month.”

KCB anticipates interest rates for high risk borrowers will rise by 2-3%.

Take this as PR until further notice. What else was the CEO supposed to say??

KCB group has retreated from an earlier plan of integrating National bank of Kenya into its operations.
NBK will continue to operate as a stand alone subsidiary of KCB.
Paul Russo the NBK managing director reckons that the shift in strategy has been informed by the fear of losing business attached to national bank.

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It will touch 44 in Dec. Then Jan 2020 it will begin to rise to 60.