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KCB and NBK material announcement
KaunganaDoDo
#21 Posted : Thursday, April 18, 2019 6:58:58 PM
Rank: Member


Joined: 8/6/2018
Posts: 292
VituVingiSana wrote:
KaunganaDoDo wrote:
Ericsson wrote:
KCB intends to acquire 100% of the ordinary shares with a par value of Ksh.5 of National Bank of Kenya.
The offer shall be a way of a share swap of 10 ordinary shares of NBK shares for every 1 ordinary share of KCB.


Is a good deal for both KCB and NBK....Though its the NBK shareholders to laugh all the way to the bank...KCB will have to recapitalize by way off injecting new Capital into NBK...Its a winner takes all. With new capital, and increased deposits through GOVERNMENT SINGLE TREASURY ACCOUNT, NBK will lend and lend and lend ....
Not really. It is likely that NBK's business will be absorbed into KCB rather than NBK being run as a separate bank with fresh capital.
NBK will probably become a subsidiary but will remain "open" (as a firm not an operating bank) as it pursues defaulters.

I&M still has Giro as a "subsidiary" but I think that's to keep the continuity for legal reasons e.g. for an ongoing lawsuit. Defaulters would go to court to fight a change in the name of the plaintiff from NBK to KCB. Many of our courts/judges are weird or ignorant in commercial matters.


In the initial stages, KCB Group will operate two banks ,KCB and NBK. Delisting doesn't mean deleting. KCB Group will transfer some of financial muscles from KCB bank to NBK...to fill capital adequacy requirements... This could be over 13 billion shillings
KaunganaDoDo
#22 Posted : Thursday, April 18, 2019 7:00:46 PM
Rank: Member


Joined: 8/6/2018
Posts: 292
VituVingiSana wrote:
KaunganaDoDo wrote:
Ericsson wrote:
KCB intends to acquire 100% of the ordinary shares with a par value of Ksh.5 of National Bank of Kenya.
The offer shall be a way of a share swap of 10 ordinary shares of NBK shares for every 1 ordinary share of KCB.


Is a good deal for both KCB and NBK....Though its the NBK shareholders to laugh all the way to the bank...KCB will have to recapitalize by way off injecting new Capital into NBK...Its a winner takes all. With new capital, and increased deposits through GOVERNMENT SINGLE TREASURY ACCOUNT, NBK will lend and lend and lend ....
Not really. It is likely that NBK's business will be absorbed into KCB rather than NBK being run as a separate bank with fresh capital.
NBK will probably become a subsidiary but will remain "open" (as a firm not an operating bank) as it pursues defaulters.

I&M still has Giro as a "subsidiary" but I think that's to keep the continuity for legal reasons e.g. for an ongoing lawsuit. Defaulters would go to court to fight a change in the name of the plaintiff from NBK to KCB. Many of our courts/judges are weird or ignorant in commercial matters.


In the initial stages, KCB Group will operate two banks ,KCB and NBK. Delisting doesn't mean deleting. KCB Group will transfer some of financial muscles from KCB bank to NBK...to fill capital adequacy requirements... This could be over 13 billion shillings
deadpoet
#23 Posted : Thursday, April 18, 2019 8:09:43 PM
Rank: Member


Joined: 9/27/2006
Posts: 496
So book value isn't coming into play in this merger?
VituVingiSana
#24 Posted : Thursday, April 18, 2019 10:28:14 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,038
Location: Nairobi
KaunganaDoDo wrote:
VituVingiSana wrote:
KaunganaDoDo wrote:
Ericsson wrote:
KCB intends to acquire 100% of the ordinary shares with a par value of Ksh.5 of National Bank of Kenya.
The offer shall be a way of a share swap of 10 ordinary shares of NBK shares for every 1 ordinary share of KCB.


Is a good deal for both KCB and NBK....Though its the NBK shareholders to laugh all the way to the bank...KCB will have to recapitalize by way off injecting new Capital into NBK...Its a winner takes all. With new capital, and increased deposits through GOVERNMENT SINGLE TREASURY ACCOUNT, NBK will lend and lend and lend ....
Not really. It is likely that NBK's business will be absorbed into KCB rather than NBK being run as a separate bank with fresh capital.
NBK will probably become a subsidiary but will remain "open" (as a firm not an operating bank) as it pursues defaulters.

I&M still has Giro as a "subsidiary" but I think that's to keep the continuity for legal reasons e.g. for an ongoing lawsuit. Defaulters would go to court to fight a change in the name of the plaintiff from NBK to KCB. Many of our courts/judges are weird or ignorant in commercial matters.


In the initial stages, KCB Group will operate two banks ,KCB and NBK. Delisting doesn't mean deleting. KCB Group will transfer some of financial muscles from KCB bank to NBK...to fill capital adequacy requirements... This could be over 13 billion shillings
That's normally the case i.e. run them as 2 banks for a little while but the endgame is to absorb the smaller/weaker bank.

Stanbic - CFC
I&M - Giro
SBM - Chase

Why transfer 13bn to NBK when KCB can backstop NBK. CBK will be OK with this arrangement as long as KCB offers guarantees.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Ericsson
#25 Posted : Thursday, April 18, 2019 10:30:38 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
omega wrote:
KaunganaDoDo wrote:
shocks wrote:
bartum wrote:
muganda wrote:
Nairobi Securities Exchange has today morning stopped trading in KCB Group and National Bank shares over a material announcement affecting the two counters.

Is KCB planning to buy National Bank? https://www.the-star.co....g-to-buy-national-bank/

In the period ending December 31, 2018 National Bank reported a 98.3 per cent drop in profit

How will this affect value of kcb, i have a material holding

Figures to watch out for is the non performing loans and the costs.
Assuming a large part of the non performing loans are written off, KCB will only get about 90billion in extra assets vs customer deposits of 98 biliion.
Income side they are getting nothing.
How fast will they cut costs on the N.B.K side and at what cost is the question.
Share dilution isn't much, about 1% if you consider ordinary shares. How will prefence shares be handled?


Conversion of the NBK outstanding stock of preference shares 1,135,000,000 is proposed to be 1 for 1 ordinary shares as per the offer..


So total NBK issued shares will be 1,443,000,000 (1,135,000,000 + 308,000,000) after preference shares conversion. This means KCB will issue 144,3000,000 shares to acquire the whole NBK. Given that KCB total issued shares is about 3 billion, this represents a dilution of about 4.8 percent.


It is 1,135,000,000+338,800,000=1,473,800,000
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ericsson
#26 Posted : Thursday, April 18, 2019 10:34:47 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
VituVingiSana wrote:
KaunganaDoDo wrote:
VituVingiSana wrote:
KaunganaDoDo wrote:
Ericsson wrote:
KCB intends to acquire 100% of the ordinary shares with a par value of Ksh.5 of National Bank of Kenya.
The offer shall be a way of a share swap of 10 ordinary shares of NBK shares for every 1 ordinary share of KCB.


Is a good deal for both KCB and NBK....Though its the NBK shareholders to laugh all the way to the bank...KCB will have to recapitalize by way off injecting new Capital into NBK...Its a winner takes all. With new capital, and increased deposits through GOVERNMENT SINGLE TREASURY ACCOUNT, NBK will lend and lend and lend ....
Not really. It is likely that NBK's business will be absorbed into KCB rather than NBK being run as a separate bank with fresh capital.
NBK will probably become a subsidiary but will remain "open" (as a firm not an operating bank) as it pursues defaulters.

I&M still has Giro as a "subsidiary" but I think that's to keep the continuity for legal reasons e.g. for an ongoing lawsuit. Defaulters would go to court to fight a change in the name of the plaintiff from NBK to KCB. Many of our courts/judges are weird or ignorant in commercial matters.


In the initial stages, KCB Group will operate two banks ,KCB and NBK. Delisting doesn't mean deleting. KCB Group will transfer some of financial muscles from KCB bank to NBK...to fill capital adequacy requirements... This could be over 13 billion shillings
That's normally the case i.e. run them as 2 banks for a little while but the endgame is to absorb the smaller/weaker bank.

Stanbic - CFC
I&M - Giro
SBM - Chase

Why transfer 13bn to NBK when KCB can backstop NBK. CBK will be OK with this arrangement as long as KCB offers guarantees.


Did I&M bank pump money into Giro or they just absorbed and rebranded the bank.
Why pump 13bn yet in the end that entity will be shut down
Exactly KCB will just backstop NBK.Several branches will
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
VituVingiSana
#27 Posted : Friday, April 19, 2019 12:35:52 AM
Rank: Chief


Joined: 1/3/2007
Posts: 18,038
Location: Nairobi
What KCB-NBK merger means
https://www.businessdail...78268-qlspa1z/index.html
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
KaunganaDoDo
#28 Posted : Friday, April 19, 2019 9:40:53 AM
Rank: Member


Joined: 8/6/2018
Posts: 292
VituVingiSana wrote:
KaunganaDoDo wrote:
VituVingiSana wrote:
KaunganaDoDo wrote:
Ericsson wrote:
KCB intends to acquire 100% of the ordinary shares with a par value of Ksh.5 of National Bank of Kenya.
The offer shall be a way of a share swap of 10 ordinary shares of NBK shares for every 1 ordinary share of KCB.


Is a good deal for both KCB and NBK....Though its the NBK shareholders to laugh all the way to the bank...KCB will have to recapitalize by way off injecting new Capital into NBK...Its a winner takes all. With new capital, and increased deposits through GOVERNMENT SINGLE TREASURY ACCOUNT, NBK will lend and lend and lend ....
Not really. It is likely that NBK's business will be absorbed into KCB rather than NBK being run as a separate bank with fresh capital.
NBK will probably become a subsidiary but will remain "open" (as a firm not an operating bank) as it pursues defaulters.

I&M still has Giro as a "subsidiary" but I think that's to keep the continuity for legal reasons e.g. for an ongoing lawsuit. Defaulters would go to court to fight a change in the name of the plaintiff from NBK to KCB. Many of our courts/judges are weird or ignorant in commercial matters.


In the initial stages, KCB Group will operate two banks ,KCB and NBK. Delisting doesn't mean deleting. KCB Group will transfer some of financial muscles from KCB bank to NBK...to fill capital adequacy requirements... This could be over 13 billion shillings
That's normally the case i.e. run them as 2 banks for a little while but the endgame is to absorb the smaller/weaker bank.

Stanbic - CFC
I&M - Giro
SBM - Chase

Why transfer 13bn to NBK when KCB can backstop NBK. CBK will be OK with this arrangement as long as KCB offers guarantees.

The reason NBK has been unable to loan out iits huge deposits is because your it was in breach of capital ratios, The loans you issues will depend on your capital adequacy limits....Now KCB taking NBK , KCB will have to increase its own capital in order to lend more Deposits coming with NBK (if the bbanks merge) or recapitalise NBK of continue to operate as a bank
obiero
#29 Posted : Friday, April 19, 2019 9:58:56 AM
Rank: Elder


Joined: 6/23/2009
Posts: 13,463
Location: nairobi
Bad for short term, excellent for the long term game

HF 428,000 ABP 3.49; KQ 414,100 ABP 7.92; MTN 15,750 ABP 6.45
Ericsson
#30 Posted : Friday, April 19, 2019 1:23:45 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
Ericsson wrote:
Ericsson wrote:
KaunganaDoDo wrote:
shocks wrote:
bartum wrote:
muganda wrote:
Nairobi Securities Exchange has today morning stopped trading in KCB Group and National Bank shares over a material announcement affecting the two counters.

Is KCB planning to buy National Bank? https://www.the-star.co....g-to-buy-national-bank/

In the period ending December 31, 2018 National Bank reported a 98.3 per cent drop in profit

How will this affect value of kcb, i have a material holding

Figures to watch out for is the non performing loans and the costs.
Assuming a large part of the non performing loans are written off, KCB will only get about 90billion in extra assets vs customer deposits of 98 biliion.
Income side they are getting nothing.
How fast will they cut costs on the N.B.K side and at what cost is the question.
Share dilution isn't much, about 1% if you consider ordinary shares. How will prefence shares be handled?


Conversion of the NBK outstanding stock of preference shares 1,135,000,000 is proposed to be 1 for 1 ordinary shares as per the offer..


Paste here the offer document.
NBK said the offer was conditional on it delisting its shares from the Nairobi Securities Exchange and converting its preference shares into ordinary shares.
If the conversion of preference shares is as above,then it means prior to the acquisition GoK will be the majority shareholder in NBK and not NSSF.



The par value of Treasury’s portion of the preference shares is Sh4.5 billion with NSSF’s claim at about Sh1.2 billion, adding up to a total of Sh5.7 billion.
Gok Owns 79% of the Preference shares and NSSF 21%


When NBK was bailed out in 2003, long-term loans worth Sh5.675 billion from NSSF and Treasury were converted to preference shares. The Treasury holds 900 million while NSSF has 235 million, or a fifth, of the special stocks valued at five shillings each.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ericsson
#31 Posted : Friday, April 19, 2019 1:27:02 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
Technically, the entity buying NBK is KCB Group, the holding company, which in the initial stages, will temporarily manage and operate two separate brands: KCB and NBK.

KCB Group could be required to inject as much as Sh40 billion into troubled State lender National Bank of Kenya to plug a gaping hole in the books as part of a takeover.

Renaissance Capital said while the government wants to get rid of troubled NBK, it may also require KCB to take over two other State-run banks (Consolidated Bank of Kenya and Development Bank of Kenya) as part of the deal.

“We estimate NBK will require a capital injection of Sh19 billion to meet the minimum capital requirement of 14.5 per cent. This would increase to Sh40 billion if NBK were to provide fully for its NPLs,” said Renaissance
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ericsson
#32 Posted : Friday, April 19, 2019 1:50:45 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
Yesterday’s confirmation about the takeover indicates that the National Treasury has eventually settled on a way to treat some 1.135 billion preferential shares held in NBK jointly with the National Social Security Fund (NSSF).
Only regulatory approvals from the Capital Markets Authority, the Central Bank, and the Competition Authority of Kenya now stand in the way of the acquisition.

But that would pretty much depend on the price of converting the preferential shares into ordinary stock. At the book price of Sh5, Treasury would have increased its stake in NBK from 22.5 per cent to 65.8 per cent (969.3 million shares).

NSSF’s shareholding would fall from the current 48.05 per cent to 26 per cent, in a major reduction on the workers pension scheme’s say at the lender.

https://www.standardmedi...bk-from-certain-collapse
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Ericsson
#33 Posted : Friday, April 19, 2019 2:09:32 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
KCB to sink in Sh7.5bn to shore up NBK capital, fund growth

KCB Group,the country’s largest bank, has made an offer to fully acquire capital-starved National Bank of Kenya (NBK)in a share swap deal valued at Sh6.6 billion.

NBK, which has fallen short of most of the minimum capital requirements, will end up with a 4.5 percent stake in KCB, according to the deal terms.

KCB chief executive Joshua Oigara told the Business Daily that the lender plans to eventually merge its operations with those of NBK when the deal is completed.

“We will in the short term extract synergies and build on our unique strengths. We will ultimately consolidate our operations,” he said.

He added that KCB may need to invest up to Sh7.5 billion in NBK to shore up its capital and fund its growth. The planned merger is also expected to yield significant savings from a review of operations.

Both banks have a combined workforce of 6,400 in Kenya and operate branches close to each other in multiple locations.

The deal is expected to be completed by July, subject to approval by shareholders of the two institutions.

The transaction is expected to gain support from the government, which is a shareholder in both lenders and has long sought the merger of State-controlled banks.

The transaction will proceed if NBK shareholders holding a combined 75 percent stake accept the offer by KCB, which plans to de-list the smaller bank from the Nairobi Securities Exchange (NSE).

KCB has proposed that NBK’s 1.1 billion preference shares –which have a higher priority claim on the company’s assets and earnings than ordinary shares— be converted into ordinary shares at a ratio of one- to- one.

This will raise the volume of issued ordinary shares to 1.4 billion, which will then be divided by ten to arrive at the 147.3 million new shares that will be issued by KCB.

The preference shares are held by the government and the National Social Security Fund (NSSF).

Previous efforts to convert them into ordinary shares have been a stumbling block in NBK’s past fundraising plans.

Mr Oigara said resolution of the preference shares is critical if the proposed transaction is to proceed.

Largest shareholder

If successful, the deal will see the government take an additional three percent stake in KCB, raising its shareholding in the lender to 20.5 percent in what will cement its position as the single largest shareholder.

NBK’s board of directors confirmed that it had received KCB’s buyout bid Thursday.

“The board of the company will consider the offer in detail and make consultations and then seek the necessary approvals from the shareholders and the regulators,” the bank said in a statement.

“As earlier communicated, National Bank’s principal shareholders have committed to improving the bank’s capital position, which is expected to unlock the potential for the bank in boosting market position, improving customer value proposition as well as enhancing the bank’s overall growth agenda.”

The deal is valued at Sh6.6 billion based on KCB’s closing price of Sh45 Thursday and represents a 5.1 percent discount to NBK’s book value of Sh6.9 billion as of December.

Massive premium

KCB’s deal, however, represents a massive premium of more than four times NBK’s market value of Sh1.5 billion Thursday.

NBK’s share price gained 4.6 percent to close at Sh4.7, having touched highs of Sh5.5 on the announcement of KCB’s offer, signalling that investors see the buyout as unlocking value for them.

KCB’s share price, on the other hand, was largely unaffected at Sh45.

Taking shares in KCB will enable NBK’s shareholders, including the government and the NSSF, to ride on KCB’s economies of scale that have delivered billions of shillings in earnings and dividends.

Mr Oigara said KCB has adequate cash to absorb NBK without raising additional capital.

“We have surplus capital and we don’t see the need to take new capital for the next few years. We will maintain our dividend payout ratio of 50 percent,” Mr Oigara said.

KCB’s move to take over NBK marks the latest deal-making in the banking sector where rivals are racing to build scale that is seen as critical in slashing costs and boosting margins.

Reduced margins


The wave of mergers and acquisitions has been motivated by the control of lending rates, a move that significantly reduced margins in the mainstay lending business.

Besides NBK, KCB is set to acquire certain parts of the collapsed Imperial Bank and the twin transactions will fuel the country’s largest bank’s race to a Sh1 trillion asset base.

KCB, which had assets of Sh714.3 billion in December, will see the figure breach the Sh800 billion mark if the tie-up with NBK is concluded.

https://www.businessdail...078950-cx994t/index.html
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
KaunganaDoDo
#34 Posted : Friday, April 19, 2019 3:22:44 PM
Rank: Member


Joined: 8/6/2018
Posts: 292
[quote=Ericsson]KCB to sink in Sh7.5bn to shore up NBK capital, fund growth

KCB Group,the country’s largest bank, has made an offer to fully acquire capital-starved National Bank of Kenya (NBK)in a share swap deal valued at Sh6.6 billion.

NBK, which has fallen short of most of the minimum capital requirements, will end up with a 4.5 percent stake in KCB, according to the deal terms.

KCB chief executive Joshua Oigara told the Business Daily that the lender plans to eventually merge its operations with those of NBK when the deal is completed.

“We will in the short term extract synergies and build on our unique strengths. We will ultimately consolidate our operations,” he said.

He added that KCB may need to invest up to Sh7.5 billion in NBK to shore up its capital and fund its growth. The planned merger is also expected to yield significant savings from a review of operations.

Both banks have a combined workforce of 6,400 in Kenya and operate branches close to each other in multiple locations.

The deal is expected to be completed by July, subject to approval by shareholders of the two institutions.

The transaction is expected to gain support from the government, which is a shareholder in both lenders and has long sought the merger of State-controlled banks.

The transaction will proceed if NBK shareholders holding a combined 75 percent stake accept the offer by KCB, which plans to de-list the smaller bank from the Nairobi Securities Exchange (NSE).

KCB has proposed that NBK’s 1.1 billion preference shares –which have a higher priority claim on the company’s assets and earnings than ordinary shares— be converted into ordinary shares at a ratio of one- to- one.

This will raise the volume of issued ordinary shares to 1.4 billion, which will then be divided by ten to arrive at the 147.3 million new shares that will be issued by KCB.

The preference shares are held by the government and the National Social Security Fund (NSSF).

Previous efforts to convert them into ordinary shares have been a stumbling block in NBK’s past fundraising plans.

Mr Oigara said resolution of the preference shares is critical if the proposed transaction is to proceed.

Largest shareholder

If successful, the deal will see the government take an additional three percent stake in KCB, raising its shareholding in the lender to 20.5 percent in what will cement its position as the single largest shareholder.

NBK’s board of directors confirmed that it had received KCB’s buyout bid Thursday.

“The board of the company will consider the offer in detail and make consultations and then seek the necessary approvals from the shareholders and the regulators,” the bank said in a statement.

“As earlier communicated, National Bank’s principal shareholders have committed to improving the bank’s capital position, which is expected to unlock the potential for the bank in boosting market position, improving customer value proposition as well as enhancing the bank’s overall growth agenda.”

The deal is valued at Sh6.6 billion based on KCB’s closing price of Sh45 Thursday and represents a 5.1 percent discount to NBK’s book value of Sh6.9 billion as of December.

Massive premium

KCB’s deal, however, represents a massive premium of more than four times NBK’s market value of Sh1.5 billion Thursday.

NBK’s share price gained 4.6 percent to close at Sh4.7, having touched highs of Sh5.5 on the announcement of KCB’s offer, signalling that investors see the buyout as unlocking value for them.

KCB’s share price, on the other hand, was largely unaffected at Sh45.

Taking shares in KCB will enable NBK’s shareholders, including the government and the NSSF, to ride on KCB’s economies of scale that have delivered billions of shillings in earnings and dividends.

Mr Oigara said KCB has adequate cash to absorb NBK without raising additional capital.

“We have surplus capital and we don’t see the need to take new capital for the next few years. We will maintain our dividend payout ratio of 50 percent,” Mr Oigara said.

KCB’s move to take over NBK marks the latest deal-making in the banking sector where rivals are racing to build scale that is seen as critical in slashing costs and boosting margins.

Reduced margins


The wave of mergers and acquisitions has been motivated by the control of lending rates, a move that significantly reduced margins in the mainstay lending business.

Besides NBK, KCB is set to acquire certain parts of the collapsed Imperial Bank and the twin transactions will fuel the country’s largest bank’s race to a Sh1 trillion asset base.

KCB, which had assets of Sh714.3 billion in December, will see the figure breach the Sh800 billion mark if the tie-up with NBK is concluded.

https://www.businessdail...78950-cx994t/index.html[/quote]
My point exactly...NBK will require capital injections to shove up It ratios.
KaunganaDoDo
#35 Posted : Friday, April 19, 2019 3:29:28 PM
Rank: Member


Joined: 8/6/2018
Posts: 292
[quote=Ericsson]KCB to sink in Sh7.5bn to shore up NBK capital, fund growth

KCB Group,the country’s largest bank, has made an offer to fully acquire capital-starved National Bank of Kenya (NBK)in a share swap deal valued at Sh6.6 billion.

NBK, which has fallen short of most of the minimum capital requirements, will end up with a 4.5 percent stake in KCB, according to the deal terms.

KCB chief executive Joshua Oigara told the Business Daily that the lender plans to eventually merge its operations with those of NBK when the deal is completed.

“We will in the short term extract synergies and build on our unique strengths. We will ultimately consolidate our operations,” he said.

He added that KCB may need to invest up to Sh7.5 billion in NBK to shore up its capital and fund its growth. The planned merger is also expected to yield significant savings from a review of operations.

Both banks have a combined workforce of 6,400 in Kenya and operate branches close to each other in multiple locations.

The deal is expected to be completed by July, subject to approval by shareholders of the two institutions.

The transaction is expected to gain support from the government, which is a shareholder in both lenders and has long sought the merger of State-controlled banks.

The transaction will proceed if NBK shareholders holding a combined 75 percent stake accept the offer by KCB, which plans to de-list the smaller bank from the Nairobi Securities Exchange (NSE).

KCB has proposed that NBK’s 1.1 billion preference shares –which have a higher priority claim on the company’s assets and earnings than ordinary shares— be converted into ordinary shares at a ratio of one- to- one.

This will raise the volume of issued ordinary shares to 1.4 billion, which will then be divided by ten to arrive at the 147.3 million new shares that will be issued by KCB.

The preference shares are held by the government and the National Social Security Fund (NSSF).

Previous efforts to convert them into ordinary shares have been a stumbling block in NBK’s past fundraising plans.

Mr Oigara said resolution of the preference shares is critical if the proposed transaction is to proceed.

Largest shareholder

If successful, the deal will see the government take an additional three percent stake in KCB, raising its shareholding in the lender to 20.5 percent in what will cement its position as the single largest shareholder.

NBK’s board of directors confirmed that it had received KCB’s buyout bid Thursday.

“The board of the company will consider the offer in detail and make consultations and then seek the necessary approvals from the shareholders and the regulators,” the bank said in a statement.

“As earlier communicated, National Bank’s principal shareholders have committed to improving the bank’s capital position, which is expected to unlock the potential for the bank in boosting market position, improving customer value proposition as well as enhancing the bank’s overall growth agenda.”

The deal is valued at Sh6.6 billion based on KCB’s closing price of Sh45 Thursday and represents a 5.1 percent discount to NBK’s book value of Sh6.9 billion as of December.

Massive premium

KCB’s deal, however, represents a massive premium of more than four times NBK’s market value of Sh1.5 billion Thursday.

NBK’s share price gained 4.6 percent to close at Sh4.7, having touched highs of Sh5.5 on the announcement of KCB’s offer, signalling that investors see the buyout as unlocking value for them.

KCB’s share price, on the other hand, was largely unaffected at Sh45.

Taking shares in KCB will enable NBK’s shareholders, including the government and the NSSF, to ride on KCB’s economies of scale that have delivered billions of shillings in earnings and dividends.

Mr Oigara said KCB has adequate cash to absorb NBK without raising additional capital.

“We have surplus capital and we don’t see the need to take new capital for the next few years. We will maintain our dividend payout ratio of 50 percent,” Mr Oigara said.

KCB’s move to take over NBK marks the latest deal-making in the banking sector where rivals are racing to build scale that is seen as critical in slashing costs and boosting margins.

Reduced margins


The wave of mergers and acquisitions has been motivated by the control of lending rates, a move that significantly reduced margins in the mainstay lending business.

Besides NBK, KCB is set to acquire certain parts of the collapsed Imperial Bank and the twin transactions will fuel the country’s largest bank’s race to a Sh1 trillion asset base.

KCB, which had assets of Sh714.3 billion in December, will see the figure breach the Sh800 billion mark if the tie-up with NBK is concluded.

https://www.businessdail...78950-cx994t/index.html[/quote]

The deal is valued at Sh6.6 billion based on KCB’s closing price of Sh45 Thursday and represents a 5.1 percent discount to NBK’s book value of Sh6.9 billion as of December.

Massive premium

KCB’s deal, however, represents a massive premium of more than four times NBK’s market value of Sh1.5 billion Thursday.

NBK’s share price gained 4.6 percent to close at Sh4.7, having touched highs of Sh5.5 on the announcement of KCB’s offer, signalling that investors see the buyout as unlocking value for them.
KaunganaDoDo
#36 Posted : Friday, April 19, 2019 4:49:33 PM
Rank: Member


Joined: 8/6/2018
Posts: 292
[quote=Ericsson]KCB to sink in Sh7.5bn to shore up NBK capital, fund growth

KCB Group,the country’s largest bank, has made an offer to fully acquire capital-starved National Bank of Kenya (NBK)in a share swap deal valued at Sh6.6 billion.

NBK, which has fallen short of most of the minimum capital requirements, will end up with a 4.5 percent stake in KCB, according to the deal terms.

KCB chief executive Joshua Oigara told the Business Daily that the lender plans to eventually merge its operations with those of NBK when the deal is completed.

“We will in the short term extract synergies and build on our unique strengths. We will ultimately consolidate our operations,” he said.

He added that KCB may need to invest up to Sh7.5 billion in NBK to shore up its capital and fund its growth. The planned merger is also expected to yield significant savings from a review of operations.

Both banks have a combined workforce of 6,400 in Kenya and operate branches close to each other in multiple locations.

The deal is expected to be completed by July, subject to approval by shareholders of the two institutions.

The transaction is expected to gain support from the government, which is a shareholder in both lenders and has long sought the merger of State-controlled banks.

The transaction will proceed if NBK shareholders holding a combined 75 percent stake accept the offer by KCB, which plans to de-list the smaller bank from the Nairobi Securities Exchange (NSE).

KCB has proposed that NBK’s 1.1 billion preference shares –which have a higher priority claim on the company’s assets and earnings than ordinary shares— be converted into ordinary shares at a ratio of one- to- one.

This will raise the volume of issued ordinary shares to 1.4 billion, which will then be divided by ten to arrive at the 147.3 million new shares that will be issued by KCB.

The preference shares are held by the government and the National Social Security Fund (NSSF).

Previous efforts to convert them into ordinary shares have been a stumbling block in NBK’s past fundraising plans.

Mr Oigara said resolution of the preference shares is critical if the proposed transaction is to proceed.

Largest shareholder

If successful, the deal will see the government take an additional three percent stake in KCB, raising its shareholding in the lender to 20.5 percent in what will cement its position as the single largest shareholder.

NBK’s board of directors confirmed that it had received KCB’s buyout bid Thursday.

“The board of the company will consider the offer in detail and make consultations and then seek the necessary approvals from the shareholders and the regulators,” the bank said in a statement.

“As earlier communicated, National Bank’s principal shareholders have committed to improving the bank’s capital position, which is expected to unlock the potential for the bank in boosting market position, improving customer value proposition as well as enhancing the bank’s overall growth agenda.”

The deal is valued at Sh6.6 billion based on KCB’s closing price of Sh45 Thursday and represents a 5.1 percent discount to NBK’s book value of Sh6.9 billion as of December.

Massive premium

KCB’s deal, however, represents a massive premium of more than four times NBK’s market value of Sh1.5 billion Thursday.

NBK’s share price gained 4.6 percent to close at Sh4.7, having touched highs of Sh5.5 on the announcement of KCB’s offer, signalling that investors see the buyout as unlocking value for them.

KCB’s share price, on the other hand, was largely unaffected at Sh45.

Taking shares in KCB will enable NBK’s shareholders, including the government and the NSSF, to ride on KCB’s economies of scale that have delivered billions of shillings in earnings and dividends.

Mr Oigara said KCB has adequate cash to absorb NBK without raising additional capital.

“We have surplus capital and we don’t see the need to take new capital for the next few years. We will maintain our dividend payout ratio of 50 percent,” Mr Oigara said.

KCB’s move to take over NBK marks the latest deal-making in the banking sector where rivals are racing to build scale that is seen as critical in slashing costs and boosting margins.

Reduced margins


The wave of mergers and acquisitions has been motivated by the control of lending rates, a move that significantly reduced margins in the mainstay lending business.

Besides NBK, KCB is set to acquire certain parts of the collapsed Imperial Bank and the twin transactions will fuel the country’s largest bank’s race to a Sh1 trillion asset base.

KCB, which had assets of Sh714.3 billion in December, will see the figure breach the Sh800 billion mark if the tie-up with NBK is concluded.

https://www.businessdail...78950-cx994t/index.html[/quote]

So in essence KCB is paying around 19 shillings per NBK share. This is massive premium. Hata kama ni cheap Deposits
Ericsson
#37 Posted : Friday, April 19, 2019 5:22:20 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
KaunganaDoDo wrote:
[quote=Ericsson]KCB to sink in Sh7.5bn to shore up NBK capital, fund growth

KCB Group,the country’s largest bank, has made an offer to fully acquire capital-starved National Bank of Kenya (NBK)in a share swap deal valued at Sh6.6 billion.

NBK, which has fallen short of most of the minimum capital requirements, will end up with a 4.5 percent stake in KCB, according to the deal terms.

KCB chief executive Joshua Oigara told the Business Daily that the lender plans to eventually merge its operations with those of NBK when the deal is completed.

“We will in the short term extract synergies and build on our unique strengths. We will ultimately consolidate our operations,” he said.

He added that KCB may need to invest up to Sh7.5 billion in NBK to shore up its capital and fund its growth. The planned merger is also expected to yield significant savings from a review of operations.

Both banks have a combined workforce of 6,400 in Kenya and operate branches close to each other in multiple locations.

The deal is expected to be completed by July, subject to approval by shareholders of the two institutions.

The transaction is expected to gain support from the government, which is a shareholder in both lenders and has long sought the merger of State-controlled banks.

The transaction will proceed if NBK shareholders holding a combined 75 percent stake accept the offer by KCB, which plans to de-list the smaller bank from the Nairobi Securities Exchange (NSE).

KCB has proposed that NBK’s 1.1 billion preference shares –which have a higher priority claim on the company’s assets and earnings than ordinary shares— be converted into ordinary shares at a ratio of one- to- one.

This will raise the volume of issued ordinary shares to 1.4 billion, which will then be divided by ten to arrive at the 147.3 million new shares that will be issued by KCB.

The preference shares are held by the government and the National Social Security Fund (NSSF).

Previous efforts to convert them into ordinary shares have been a stumbling block in NBK’s past fundraising plans.

Mr Oigara said resolution of the preference shares is critical if the proposed transaction is to proceed.

Largest shareholder

If successful, the deal will see the government take an additional three percent stake in KCB, raising its shareholding in the lender to 20.5 percent in what will cement its position as the single largest shareholder.

NBK’s board of directors confirmed that it had received KCB’s buyout bid Thursday.

“The board of the company will consider the offer in detail and make consultations and then seek the necessary approvals from the shareholders and the regulators,” the bank said in a statement.

“As earlier communicated, National Bank’s principal shareholders have committed to improving the bank’s capital position, which is expected to unlock the potential for the bank in boosting market position, improving customer value proposition as well as enhancing the bank’s overall growth agenda.”

The deal is valued at Sh6.6 billion based on KCB’s closing price of Sh45 Thursday and represents a 5.1 percent discount to NBK’s book value of Sh6.9 billion as of December.

Massive premium

KCB’s deal, however, represents a massive premium of more than four times NBK’s market value of Sh1.5 billion Thursday.

NBK’s share price gained 4.6 percent to close at Sh4.7, having touched highs of Sh5.5 on the announcement of KCB’s offer, signalling that investors see the buyout as unlocking value for them.

KCB’s share price, on the other hand, was largely unaffected at Sh45.

Taking shares in KCB will enable NBK’s shareholders, including the government and the NSSF, to ride on KCB’s economies of scale that have delivered billions of shillings in earnings and dividends.

Mr Oigara said KCB has adequate cash to absorb NBK without raising additional capital.

“We have surplus capital and we don’t see the need to take new capital for the next few years. We will maintain our dividend payout ratio of 50 percent,” Mr Oigara said.

KCB’s move to take over NBK marks the latest deal-making in the banking sector where rivals are racing to build scale that is seen as critical in slashing costs and boosting margins.

Reduced margins


The wave of mergers and acquisitions has been motivated by the control of lending rates, a move that significantly reduced margins in the mainstay lending business.

Besides NBK, KCB is set to acquire certain parts of the collapsed Imperial Bank and the twin transactions will fuel the country’s largest bank’s race to a Sh1 trillion asset base.

KCB, which had assets of Sh714.3 billion in December, will see the figure breach the Sh800 billion mark if the tie-up with NBK is concluded.

https://www.businessdail...78950-cx994t/index.html[/quote]

So in essence KCB is paying around 19 shillings per NBK share. This is massive premium. Hata kama ni cheap Deposits

They are paying ksh.4.5 per inclusive of the preference shares which have to be converted to ordinary shares first at the ratio of 1;1
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
HaMaina
#38 Posted : Tuesday, April 23, 2019 9:20:25 AM
Rank: Veteran


Joined: 4/23/2014
Posts: 903
KaunganaDoDo wrote:
Ericsson wrote:
KCB intends to acquire 100% of the ordinary shares with a par value of Ksh.5 of National Bank of Kenya.
The offer shall be a way of a share swap of 10 ordinary shares of NBK shares for every 1 ordinary share of KCB.


Is a good deal for both KCB and NBK....Though its the NBK shareholders to laugh all the way to the bank...KCB will have to recapitalize by way off injecting new Capital into NBK...Its a winner takes all. With new capital, and increased deposits through GOVERNMENT SINGLE TREASURY ACCOUNT, NBK will lend and lend and lend ....


It would have been nice if Safaricom had taken the initiative and purchased NBK, that would definitely have given Equity and Equitel a run for their money.
“You can get in way more trouble with a good idea than a bad idea, because you forget that the good idea has limits.” - Ben Graham
Ericsson
#39 Posted : Tuesday, April 23, 2019 3:44:27 PM
Rank: Elder


Joined: 12/4/2009
Posts: 10,626
Location: NAIROBI
HaMaina wrote:
KaunganaDoDo wrote:
Ericsson wrote:
KCB intends to acquire 100% of the ordinary shares with a par value of Ksh.5 of National Bank of Kenya.
The offer shall be a way of a share swap of 10 ordinary shares of NBK shares for every 1 ordinary share of KCB.


Is a good deal for both KCB and NBK....Though its the NBK shareholders to laugh all the way to the bank...KCB will have to recapitalize by way off injecting new Capital into NBK...Its a winner takes all. With new capital, and increased deposits through GOVERNMENT SINGLE TREASURY ACCOUNT, NBK will lend and lend and lend ....


It would have been nice if Safaricom had taken the initiative and purchased NBK, that would definitely have given Equity and Equitel a run for their money.

Safaricom not interested in banking business and it would have been a wrong move.
Have you seen how Equitel has performed since inception/contributed to Equity Bank's bottomline?.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
VituVingiSana
#40 Posted : Tuesday, April 23, 2019 3:49:19 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,038
Location: Nairobi
HaMaina wrote:
KaunganaDoDo wrote:
Ericsson wrote:
KCB intends to acquire 100% of the ordinary shares with a par value of Ksh.5 of National Bank of Kenya.
The offer shall be a way of a share swap of 10 ordinary shares of NBK shares for every 1 ordinary share of KCB.


Is a good deal for both KCB and NBK....Though its the NBK shareholders to laugh all the way to the bank...KCB will have to recapitalize by way off injecting new Capital into NBK...Its a winner takes all. With new capital, and increased deposits through GOVERNMENT SINGLE TREASURY ACCOUNT, NBK will lend and lend and lend ....

It would have been nice if Safaricom had taken the initiative and purchased NBK, that would definitely have given Equity and Equitel a run for their money.
Why buy NBK with its myriad problems that would be expensive to solve? If Safaricom wants to buy a bank, it should go for one that is relatively clean. Hit the ground running.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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