KCB Group proposes takeover of National Bank via share swap

By Duncan Miriri

NAIROBI, April 18 (Reuters) - Kenya's biggest lender by assets KCB Group has offered to buy National Bank of Kenya through a share swap consisting of one KCB share for every 10 of NBK, joining a wave of consolidation in the country's banking industry.

The offer announced on Thursday marks the second major deal among lenders since the government capped commercial lending rates in 2016, crimping lenders' profit margins and forcing them to look for survival strategies, including consolidation.

KCB did not give a valuation for NBK which said its board would "consider the offer in detail and make consultations and then seek the necessary approvals from the shareholders and the regulators".

Sources familiar with the negotiations cast the offer as a rescue deal aimed at pulling NBK out of its perennial low liquidity troubles.

NBK, in which the government and the state pension fund NSSF have a combined 70 percent stake, has also been struggling with mounting bad debts in recent years. Finance ministry and central bank officials were not available for immediate comment.

The NBK acquisition will help KCB increase its share of government banking business since NBK enjoys a prime position in securing deposits from the government and its agencies.

NBK said the offer was conditional on it delisting its shares from the Nairobi Securities Exchange and converting its preference shares into ordinary shares.

Its shares were up almost 10 percent at 4.82 shillings while KCB shares were unchanged at 44.95 shillings after trading resumed following a suspension earlier pending the announcement.

KCB has been looking to bolster growth by joining the industry move to consolidate, its CEO Joshua Oigara told Reuters in January.

The lender, which also operates in Uganda, Tanzania, Rwanda, Burundi and South Sudan, is also finalising the acquisition of 25 billion shillings ($247.16 million) worth of assets from Imperial Bank, which collapsed in 2015.

($1 = 101.1500 Kenyan shillings)

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