- Acting Treasury CS Ukur Yatani said the government supports the acquisition to grow a strong banking sector that can meet its obligations.
- This means the deal is as good as done since the government, through the Treasury and NSSF, is NBK’s majority shareholder.
- The litany of problems NBK is facing, which worsened in 2016, mean that without a rescue plan, the half a century-old financial institution would cave in.
- Despite the fundamental limitations, the board has managed to steer the bank to improved profitability over the last three years while continuing to engage the shareholders on the injection of additional capital.
The National Treasury on Thursday backed KCB Group’s acquisition of the ailing National Bank of Kenya in a share-swap deal that closes on August 30, a day after a House team opposed the move.
This means the deal is as good as done since the government, through the Treasury and NSSF, is NBK’s majority shareholder.
Acting Treasury CS Ukur Yatani said the government supports the acquisition to grow a strong banking sector that can meet its obligations.
Mr Yatani’s statement came a day after the Parliamentary Committee on Finance recommended that the acquisition be halted and that Treasury finds alternative means of injecting liquidity into the struggling bank.
The full House is yet to debate the report House Majority Leader Aden Duale tabled.
“Since the merger process started, consultations have been ongoing with various stakeholders including Parliament,” Mr Yatani said in a series of tweets.
“The government is confident that these consultations will yield positive results for both KCB and NBK to support the bigger government agenda of strengthening the financial sector in Kenya,” he added.
The CS spoke as KCB issued a statement on its intention to close the deal, adding, it looked forward to discuss it with MPs.
“We are conscious that Parliament has a role to play in national governance and we shall endeavour to uphold the relevant legal and regulatory requirements at every stage of the transaction,” KCB said.
NBK shareholders had already received offer documents and KCB said they remained optimistic they would receive positive responses.
Central Bank Governor Patrick Njoroge had earlier warned Parliament that NBK was heavily in the red and that KCB’s acquisition of NBK was its only way out of the woods.
Dr Njoroge told the Finance committee that NBK was facing several challenges including non-compliance with regulatory capital requirements and its business growth had been curtailed.
“In CBK’s opinion, the proposal by KCB is the most appropriate and the only option at this time for NBK,” he said.
Treasury was of similar view when they appeared before the committee, chaired by Kipkelion East MP Francis Limo. It warned that if the issue facing NBK was not addressed, it would cause negative ripple effects across the banking sector.
The committee, however, rejected the counsel from Treasury and CBK and recommended that NBK shareholders should not accept the offer by KCB.
The committee’s recommendations will, however, require the approval of the House.