MPs begin probe of NBK takeover deal

A parliamentary committee is today expected to start investigating the proposed takeover of National Bank of Kenya (NBK) #ticker:NBK by KCB Group #ticker:KCB, focusing on the valuation and whether the interests of pensioners, employees and taxpayers have been protected in the deal.

The National Assembly Finance and National Planning Committee has 60 days to present a report to the House following a directive by Speaker Justin Muturi following a petition by Nyatike MP Tom Odege.

Mr Odege said the proposed takeover should be investigated to clear all the doubts surrounding the deal, including establishing whether it was subjected to public participation as required by law instead of leaving it to boardroom dealings between the two banks in which the government owns significant stakes.

The government and the National Social Security Fund (NSSF) have a combined stake of 23.65 per cent in KCB and 70.60 per cent in NBK.

Mr Odege, citing NBK’s weak financial position, said it was also important to establish whether the deal was properly valued and the interests of pensioners and taxpayers protected.

KCB Group has offered to buy 100 per cent of NBK through a share swap consisting of one KCB share for every 10 of NBK in a deal valuing the bank at Sh6.6 billion.

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

“The government ought to intervene so as to safeguard her interests and those of the pensioners and employees and ensure that the takeover is done in an open manner where public participation is conducted and all stakeholders are involved,” Mr Odege says in the petition.

The committee is also expected to establish why the entire process of the acquisition was single-sourced and whether the government is trying to create a monopoly in the banking sector.

But even as MPs investigate the matter, approvals by the regulators — the Capital Markets Authority (CMA), the Central Bank of Kenya (CBK), and the Competition Authority of Kenya (CAK) — are pending.