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Access Bank moves to buy National Bank of Kenya

Access Bank has signed a pact with Nairobi-headquartered National Bank of Kenya, setting the flagship subsidiary of Nigeria’s largest lender up for the ownership of the company, which has been in business since 1968.

The target bank was formerly controlled by the Kenyan Government but is now owned by KCB Group Plc, the parent of the country’s biggest commercial lender.

The deal is the first to be announced since the passing away last month of Herbert Wigwe, the erstwhile CEO of Access Bank’s parent company Access Holdings, who had been the driving force of the group’s peerless exploits in the continent’s M&A market among Nigerian banks.

“The parties will be working together in the coming months to fulfil the conditions precedent relating to the transaction, which includes the regulatory approvals of the Central Bank of Nigeria and the Central Bank of Kenya,” Access Holdings said in a regulatory note on Wednesday.

Reuters reported that KCB Group’s CEO Paul Russo stated that the transaction has been valued at 1.25 times the book value of the target bank.

“The right thing to do is to accept a binding offer from Access Group,” Mr Russo was quoted at saying at an investor call.

“Regrettably, some significant legacy pains have eroded all the gains we have made,” said KCB Group chair, Joseph Kinyua, at the meeting in reference to the attempt by his company to transform the bank after taking it over in 2019.

At closure, the transaction will pave the way for the plan to marry both the target company and the acquirer, a push Access Holdings said would help create a bigger franchise central to the actualisation of “our strategic objective for the Kenyan and East African markets.”

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Taking over National Bank of Kenya is a consolation for Access Bank, whose similar bid to procure a controlling stake in Sidian Bank, based in the same country, flopped last January.

A slew of banking acquisitions outside its home market Nigeria in recent years and several others within the Nigerian financial services since adopting holding company structure helped take Access Holdings asset valuation to N21.4 trillion at the end of last September, the biggest by any Nigerian lender.

Yet, that valuation has not translated to significant market value, with sentiment and market forces not favouring the stock as expected, leaving it pretty much undervalued.

In market capitalisation terms, it takes the rear among the country’s five biggest lenders, lagging FBN Holdings, Guaranty Trust Holding Company, Zenith Bank, and United Bank for Africa.

“This proposed acquisition marks a significant step in the execution of our five-year strategic plan aimed at positioning the Bank as Africa’s Gateway to the World,” said Bolaji Agbede, Access Holdings recently-named CEO.

“The deal with NBK, a historically strong and well-known bank in Kenya with a balance sheet in excess of US$1.1 billion, presents a compelling opportunity to scale up our growth in the East African market,” the official added.

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