Kenyan banking giant KCB Group (KCB.NR) is reportedly gearing up to announce the sale of its subsidiary National Bank of Kenya (NBK).
- Kenyan banking giant KCB Group (KCB.NR) is reportedly gearing up to announce the sale of its subsidiary National Bank of Kenya (NBK).
- The exact value of the potential deal remains undisclosed.
- The bank is likely to be acquired by an unnamed Nigerian lender.
While the exact value of the potential deal remains undisclosed, the Daily Nation suggests that the bank is likely to be acquired by an unnamed Nigerian lender, the Daily Nation newspaper reported.
Following this news, KCB Group shares saw an uptick in early trading, rising by 7% to 26.00 shillings ($0.1970) as of 0645 GMT on the Nairobi Securities Exchange.
KCB, the second-largest lender in East Africa, acquired NBK, a medium-sized lender previously under state control, through a rescue deal orchestrated by the central bank in 2019.
KCB initially expressed a long-term investment commitment to NBK. However, according to Eric Musau, head of research at Nairobi-based Standard Investment Bank, recent declines in capital adequacy ratios over the past two years may have prompted a reassessment of this stance, Reuters reported.
NBK's core capital to risk-weighted assets dropped to 6.9% by the end of September last year, falling below the minimum requirement of 10.5%.
"They would have needed to recapitalise NBK," Musau said, adding that KCB will be able to pay shareholders a return if the proposed sale is confirmed.
Additionally, KCB has expanded its footprint in other regional markets in recent years, including acquiring an 85% stake in Trust Merchant Bank in the Democratic Republic of the Congo, a move completed in late 2022. However, this expansion has added further strain on its own reserves.
