Kenya Commercial Bank (KCB) intention to buy National Bank of Kenya throw a swap has been suspended.
In a statement, the bourse said Thursday morning: “NSE wishes to inform investors, shareholders and the general public that we have halted trading of KCB and NBK shares as we await material disclosure from NBK affecting the two counters.”
The move came as KCB offered to buy a 100% stake in NBK through a share swap consisting of one KCB share for every 10 of NBK. Trading resumed following the announcement by KCB.
“The offer is subject to shareholder and regulatory approvals and has been served on NBK. KCB proposes to make the acquisition through a share swap of 10 ordinary shares of NBK for every 1 ordinary share of KCB,” it said in a statement.
“The proposed transaction to acquire National Bank of Kenya will further consolidate the banking sector in Kenya and will create stronger institutions enabling KCB to play a bigger role in the financial inclusion agenda,” said CEO Joshua Oigara.
NBK has been facing liquidity problems following a delay by the National Treasury to inject more money to shore its cash book.
NBK used to be the banker for the largest employer in the country — the Teachers Service Commission. It still retains a substantial portion of the business. It used to be the designated banker for receiving payments to Kenya Revenue Authority and still retains a big chunk of this business.
When the details of the transaction are finally put out, it will be interesting to see how the vexing issue of the mainly government-owned preference shares in the books of the bank — which have always been the deal breaker for investors interested in buying the bank — will be treated.