Undertable deals in the KCB NBK takeover

Undertable deals in the KCB NBK takeover


A phone call by a senior State House operative to the deputy speaker of the national assembly frustrated parliament’s bid to discuss Kenya Commercial Bank’s takeover bid of National Bank of Kenya.

The national assembly’s finance committee had rejected the multibillion takeover of NBK last week on Wednesday.

The finance and national planning committee chaired by Kipkelion East legislator Joseph Limo which has been investigating the proposed acquisition of NBK by KCB had shown intention to file the motion for debate in parliament a day after recommending for its rejection but the motion was never listed for discussion in parliament after the deputy speaker Moses Cheboi received a call not to list the motion for discussion.

Majority leader and Garissa MP Aden Duale had tabled the committee’s report in parliament on Wednesday of last week waiting for the requisite approval.

The committee recommended that NBK’s principal shareholders who include the Treasury with 22.5pc and the National Social Security Fund with 48.05pc reject KCB’s offer to acquire 100pc of the bank’s shareholding.

Parliament instead wants Treasury to seek alternative ways to fund the fledgling bank despite fears that a delayed takeover might lead to the financial institution’s collapse.

The parliamentary committee insists that NBK with its 86 branches countrywide, is stronger than it is being portrayed by individuals and cartels interested in plundering it.

“The main challenge the bank is facing is that of core capital and the total risk weighted assets ratio which is 2.4pc below the minimum statutory requirement of 10.5pc,” the committee’s report says.

The supposed takeover has been hurriedly pushed by senior NBK officials who have allegedly been cannibalising the bank before its acquisition by especially diverting million of shillings in loans being repaid by clients into personal accounts and by declaring them bad loans

Chairman Mohamed Hassan, managing director Wilfred Musau, head of corporate Reuben Koech have been supporting the merger with Treasury mandarins even before considering alternative options of reviving the bank.

The NBK board claims that the KCB offer for NBK is the only offer and thus the best and yet NBK was never openly offered for sale.

This apparently is because the difference between the offer price and true value is set to be shared between KCB staff and National Treasury mandarins.

The deal has been hurried that regulatory authorities like the Privatisation Commission and Capital Markets Authority have not been involved in the merger while the suspended Treasury cabinet secretary Henry Rotich under whose jurisdiction the bank falls created a false narrative that NBK would collapse if it is not taken over specifically by KCB.

It is believed that the Central Bank of Kenya governor Patrick Njoroge was armtwisted to accept the takeover or risk getting a second term.

KCB Chairman Andrew Kairu

While legislators through the finance committee have valued NBK at Sh9 billion, Treasury mandarins have pegged the takeover price at Sh5 billion.

All this is going on as 1500 NBK and KCB staff are set to lose their jobs if the deal goes through.

One senior NBK manager is set to use his kickback from the takeover to finance his Makueni gubernatorial campaign come 2022.

The question is why can’t NBK raise capital like any other financial institution through the rights issue yet the conversion of preference shares has since been addressed?

Rotich had told the finance committee that the takeover presented an opportunity to avert a banking sector crisis but the finance committee noted that as far as liquidity ratios are concerned, NBK is performing well at 40.4 pc compared to KCB’s 35.6pc.

KCB offered bid share price of Sh3.80 for NBK’s total Sh 6 billion value shares against independent valuation of per share price of Sh6.10 for the Sh 9 billion shares.

The finance committee is concerned that NBK is Kenya Revenue Authority’s principal tax payment collector, hence a strategic government institution that cannot just be allowed to collapse.

All this is happening as KCB under chief executive officer Joshua Oigara and the chairman Andrew Kairu are experiencing a management crisis and inside trading.

In fact, word has it that the NBK takeover which was pushed by KCB legal team is aimed at benefitting a section of lawyers in drafting the legal papers with the chairman and Oigara being touted the major beneficiaries in kickbacks.

An MP well versed with the underdealings threatened to expose lawyers involved in the legal fee payments and the amount involved.