What's Inside

• CBK, Treasury Approve National Bank Sale to Access …

• UK Government Takes Control of British Steel Plant

• Headlines You Might Have Missed

• Interview of the Week

CBK, Treasury Approve National Bank Sale to Access Bank

Six years after KCB Group acquired National Bank of Kenya (NBK), the Central Bank of Kenya (CBK) and the National Treasury have approved its sale to Access Bank PLC.

• In a gazette notice late last week, CBK Governor Kamau Thugge said the apex bank had approved the deal in early April, while Treasury approved it on April 10th.

• The approvals now set the stage for the acquisition of NBK and its subsequent merger with Access Bank’s existing subsidiary in Kenya.

• In mid-March, reports indicated that the Central Bank of Nigeria had placed a condition for Access Bank, which is listed in its home market, to divest from its holdings in the Democratic Republic of Congo (DRC) before acquiring NBK.

KCB and Access Bank signed the share purchase in March 2024, setting the stage for the latter to acquire the struggling NBK at 1.25* of its book value. Access Bank has been on a M&As streak across the continent, acquiring Grobank in South Africa, BancABC in Botswana and Mozambique, Diamond Bank in Nigeria, and Finibanco Angola. 

Why it Matters

For KCB Group and the markets, the approvals are a sigh of relief since the acquisition of National Bank of Kenya in 2019 brought with it a litany of issues including an extensive bad loan book, capital constraints, and significant litigation risks.

This made the struggling lender KCB’s only struggling subsidiary, and a drag on its profit base as it continually made losses.

For Access Bank, which has been on a M&As streak across the continent, acquiring Grobank in South Africa, BancABC in Botswana and Mozambique, Diamond Bank in Nigeria, and Finibanco Angola, the new acquisition brings both problems and opportunity.

Access Bank has made a business model as a turnaround multinational, acquiring struggling lenders like NBK for a discount and transforming them into formidable institutions. In the short-term, the acquisition and subsequent merger will push Access Bank’s Kenya subsdiary into the Tier 2 category, boost its capital base and expand its networks.

It’ll also burden it everything that KCB struggled with during its short stint as NBK’s parent company.

Stay updated on this and other important news on The Kenyan Wall Street.

Persistent deflation tends to erode corporate margins, reduce wages, and weaken employment. In China’s case, factory-gate prices have now fallen for 18 straight months, pointing to entrenched industrial pressure. Read More.

UK Government Takes Control of British Steel Plant

On Saturday, legislators in the United Kingdom (UK) were summoned to pass an emergency law that effectively kickstarted the process to nationalise a Chinese-owned British Steel plant in Lincolnshire.

• The plant is the last of its kind in the country that can produce virgin steel, critical in infrastructure projects.

• The new law, which was passed and assented to in a single day, gives the government effective control of the site, including control over production, management and oversight.

• It has changed hands severally since it was founded in 2016, ending up in the ownership of Chinese firm Jingye in 2020.

In March, the company said it was losing  £700,000 a day and was at risk of imminent powers.

While the government has said that the move does not constitute nationalising the mill, top officials have said that is the likely future of the critical plant.

In 2023, the steel industry contributed only about 0.1% of the country’s economic output and 1.0% of its manufacturing output.

Headlines You Might Have Missed

The Tax Tribunal has dealt a blow to Fine Spinners Limited, a textile firm, after it affirmed a decision by the Kenya Revenue Authority (KRA) requiring the payment of an additional KSh 77.8 million in Capital Gains Tax (CGT) after it sold its property in 2022. Read More.

Multilateral financial institution African Export-Import Bank (Afreximbank) has commissioned its first Afreximbank African Trade Centre (AATC) in Abuja, Nigeria, as it sets its ambitions on similar projects across and outside the continent. Read More.

Newly-appointed Health Cabinet Secretary Aden Duale has appointed former Chief Administrative Officer (CAS) Dr. Mercy M. Mwangangi as the new Chief Executive Officer of Social Health Authority (SHA). Read More.

AfricaNenda, a nonprofit backed by the Gates Foundation, has accelerated digital payment systems development in five African markets including Rwanda, Cabo Verde, Mauritania, South Sudan, and the Central African Economic and Monetary Community (CEMAC) region. Read More.

Interview of the Week

Have a great week!