Nigerian lender Access Bank to buy National Bank of Kenya from KBC Group

By bne IntelliNews March 20, 2024

Nigerian lender Access Bank has announced plans to buy the National Bank of Kenya (NBK) from KCB Group, its second acquisition in the East African country after having bought Transnational Bank in 2019, and part of a wider expansion drive.

“The transaction represents an important milestone for the bank as it moves us closer to the achievement of our five-year strategic plan through increased scale in the Kenyan market,” Access Bank chief executive Roosevelt Ogbonna said in a statement on Wednesday (March 20).

“Trade flows in East Africa revolve around key trade corridors, with Kenya being a key player in the region. With the African Continental Free Trade Agreement (AfCTA), these corridors will continue to expand and by deploying our best-in-class financial solutions, we are strategically positioned to deliver sustainable value for our stakeholders,” he said.

The value of potential deal, which is subject to regulatory approvals from both countries’ central banks and the COMESA Competition Commission, among others, was not revealed.

“The consolidation in Kenya will support the realisation of our aspiration to be Africa’s Payment Gateway to the World. Subsequent to the completion of the transaction, NBK would be combined with Access Bank Kenya Plc to create an enlarged franchise in the pursuit of our strategic objective for the Kenyan and East African markets,” Ogbonna said.

The Nigeria lender had said previously that it plans to double the share of assets outside its home market by 2027, in part due to competition domestically from the rapidly scaling fintech companies, Bloomberg reports.

KCB, which is the second-biggest lender in Kenya, had acquired NBK, a medium-sized lender controlled by the state at the time, in a rescue deal engineered by the central bank in 2019.

“This transaction represents what we believe is a great opportunity to maximise value for our shareholders while strengthening the competitive position for the Group,” said Paul Russo, CEO, KCB Group. “The past four years have been defining for NBK as a KCB Group subsidiary and this step marks the opening of new opportunities.”

While KCB had said it had long-term plans for the Kenyan unit, narrowing capital adequacy ratios in the past two years may have prompted a rethink, said Eric Musau, head of research at Nairobi-based Standard Investment Bank, as quoted by Reuters.

NBK's core capital to risk-weighted assets fell to 6.9% at the end of September 2023, below the minimum requirement of 10.5%. “They would have needed to recapitalise NBK,” Musau is quoted as saying.

KCB has also acquired banks in other markets in the region in recent years, including an 85% stake in Trust Merchant Bank in the Democratic of the Congo (DRC) completed in late 2022.

Access Bank operations in the DRC and Rwanda and in January completed its acquisition of Atlas Mara Zambia, thereby becoming one of Zambia’s top five banks by revenue with prospects to be in the top three by 2027.

It has announced plans to acquire a majority stake in Uganda’s Finance Trust Bank Limited, the acquisition of a majority equity stake in African Banking Corporation (Tanzania) Limited (BancABC Tanzania), and Standard Chartered Bank’s Consumer, Private and Business Banking business in Tanzania.

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