Treasury has vowed to go ahead with the acquisition of National Bank of Kenya (NBK) by Kenya Commercial Bank (KCB) Group. Acting Treasury Cabinet Secretary Ukur Yatani yesterday said in Parliament that the Government had full faith in the deal. Mr Yatani was responding to objections raised by the Departmental Committee of Finance and National Planning of the planned buyout through a share swap. “The Government is confident that the consultations will yield positive results for both KCB and NBK in order to support the bigger agenda of strengthening the financial sector in Kenya,” Mr Yatani said.
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Henry Rotich, his predecessor, has been pushing for mergers in the banking sector, with a view to creating fewer but stronger lenders in the highly fragmented market. Among the reasons for the push is that there were too many lenders in the market, many too small to compete, especially in developing new products and competitive pricing of loans and savings. Yatani’s statement last evening followed optimism expressed by KCB that the acquisition, which has since been approved by shareholders of both lenders, will go on. KCB said it was ready to present to Parliament the justification for the takeover, which has been billed as the only lifeline for the struggling NBK. “We are conscious that Parliament has a role to play in national governance and we shall endeavor to uphold the relevant legal and regulatory requirements at every stage of the transaction,” KCB said in a statement. KCB initiated the buyout in April in a proposal that has met little resistance since, with blessings coming from Central Bank of Kenya, Capital markets Authority and the National Treasury. After a lengthy bargain, NBK shareholders were granted a share in KCB for every 10 held, in the merger-cum-buyout. NBK, according to the proposals, would cease trading under its brand within a year after the deal. Some MPs have, however, argued that NBK got a raw deal, considering the number of branches it operates.
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National Bank of Kenya NBK Kenya Commercial Bank National Treasury