KCB Group value jumps to Sh123b after NBK takeover

Monday, September 9th, 2019 23:03 |
KCB Group Chief Executive Officer Joshua Oigara.

KCB Group Plc market value will jump slightly by Sh5.5 billion to Sh122.6 billion from Sh117.1 billion following the acquisition of National Bank of Kenya (NBK).

The new development puts the lender at par with some of the top banks in terms of market capitalisation, not only in East Africa, but also in the  Central African region.

In the new shareholding structure, about 3.1 billion shares, currently held by KCB Group shareholders, if added to 147.4 million from NBK will bring shareholding to 3.21 billion shares.

Sterling Capital Director John Kirimi said KCB Group takeover of NBK is viewed positively in the market as well as the region as large-cap banks are considered to be less risky because they are well-established and information about them is readily available.

“This availability of information is a big advantage for large cap investors,” he told Business Hub, adding that companies with large cap stocks are usually believed to be more liquid, so when an investor wants to exit it is easier to do so. 

Market price

Market value is calculated by multiplying the current market price of a company’s stock by the total number of shares outstanding. KCB Group shares traded at Sh38.20 on Friday.

Moses Gituiki, investment analyst at Venture Capital said top of the list in the integration process led by Paul Russo, appointed last week as the designate Managing Director of NBK will be human resource streamlining.

Russo, who was serving as the Group’s Director of Regional Businesses, has been tasked with leading the transition team that will directly report to KCB Group Chief Executive Officer Joshua Oigara.

It is expected that the NBK Board will be reorganised and will provide guidance during the transactional two-year period of integration into KCB.

Gituiki said for the merged group to deliver good performance there is the need to have lean but efficient staff to deliver services in order to retain the market position and deliver business growth and profitability. 

 “The rationalisation is expected to bring down the bank’s salary costs marginally to enable the bank operate efficient business,” he added.

He said of late banks have been facing intense pressure to increase efficiency and reduce costs by embracing digital services to compensate thinning profits caused by the capping of interest rates.

Several banks such as Equity, Standard Chartered Bank, Barclays Bank of Kenya, KCB Bank, NBK, First Community, Sidian Bank and NIC have been able to reduce their staff in a bid to manage staff costs.

Oigara hinted that with completion of the merger, the KCB will work towards streamlining human resources, systems, processes and procedures to fully realise the value of the envisioned combined efficiencies and productivity synergies post the acquisition.

“We will take a number of integration decisions including rationalisation of our branch network in order to enhance service delivery to our customers,” he said.

Oigara said the acquisition fits well into KCB’s expansion strategy and gives the group a stronger edge to play a bigger role in driving the financial inclusion and economic empowerment agenda in the East African region while simultaneously building a robust and financially sustainable organisation.

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