One of the Nigerian financial institutions in Africa, Access Bank, one of Nigeria’s largest banks, is set to acquire the National Bank of Kenya (NBK), a subsidiary of the Kenyan-based regional lender, KCB Group. The acquisition is poised to further cement Access Bank’s presence in Kenya, following its acquisition of Transnational Bank in 2019, and marks another milestone in its ambitious expansion across the African continent.
KCB Group CEO, Paul Russo, announced that the group has reached an agreement to sell 100% of NBK to Access Bank at 1.25 times its book value. This valuation was achievable due to the successful turnaround strategies implemented by KCB over the past four years, aimed at revitalizing the struggling subsidiary. The sale to Access Bank, a lender known for its aggressive expansion strategy through mergers and acquisitions across Africa, represents a strategic exit for KCB from one of its challenging investments.
Access Bank’s foray into the Kenyan market and its expansion across Africa highlight the bank’s strategic aspirations beyond its home borders. In recent years, Access Bank has made notable acquisitions, including Grobank in South Africa, BancABC in Botswana and Mozambique, Diamond Bank in Nigeria, and Finibanco Angola. These moves are part of Access Bank’s broader strategy to bolster its market share and establish a formidable presence across key African markets.
The decision to sell NBK to Access Bank came after KCB Group’s board evaluated multiple options to safeguard the value and the efforts invested in NBK. “To protect the value and the efforts we’ve put in NBK, the right thing to do is to accept a binding offer from Access Group,” Russo stated during the announcement of KCB Group’s 2023 financial results. This acquisition is expected to create a stronger and more competitive banking entity in Kenya, with Access Bank aiming to merge NBK with Access Bank Kenya PLC. This merger is anticipated to forge an enlarged franchise, propelling the combined entity towards achieving strategic objectives in the Kenyan and East African markets.
The move comes after Access Bank’s failed attempt to acquire Sidian Bank from Centum Investments earlier in 2023. Despite the setback, Access Bank’s MD and CEO, Roosevelt Ogbonna, expressed the bank’s continuous pursuit of both organic and inorganic growth opportunities in Kenya, emphasizing the strategic importance of the Kenyan market in Access Bank’s pan-African expansion strategy.
KCB Group’s acquisition of NBK five years ago has been fraught with challenges, including efforts to address capital constraints and non-performing loans. Despite significant investments to revitalize NBK, legacy issues have persisted, impacting the bank’s performance. The sale to Access Bank is viewed as a strategic move to resolve these longstanding challenges, offering a pathway to recovery and growth for NBK under new ownership.
The news of the acquisition deal has had a positive impact on KCB Group’s stock, with shares rising by 7% in the hours following the announcement. The transaction, however, is subject to regulatory approvals from both the Central Bank of Kenya (CBK) and the Central Bank of Nigeria (CBN), as well as the Competition Authority of Kenya (CAK) and the COMESA Competition Commission. The deal’s completion is expected to take between six to nine months, marking a significant period of transition for both NBK and the broader banking landscape in Kenya.
This acquisition underscores the dynamic nature of the African banking sector, where strategic mergers and acquisitions are reshaping market dynamics and competitive landscapes. For Access Bank, the acquisition of NBK represents another step in its ambitious journey to become a leading financial institution not just in Nigeria but across the African continent.
