This archive report was first published on 12 August 2019.
Kenya Commercial Bank's (KCB) takeover bid of National Bank of Kenya (NBK) has been marred by allegations of underhand dealings and corruption. The proposed acquisition has been met with resistance from the national assembly's finance committee, which had rejected the multibillion takeover of NBK last week on Wednesday.
According to sources, a senior State House operative made a phone call to the deputy speaker of the national assembly, Moses Cheboi, instructing him not to list the motion for discussion in parliament. This move effectively blocked the committee's attempt to debate the takeover bid.
The finance and national planning committee, chaired by Joseph Limo, had recommended the rejection of the takeover bid, citing concerns over the bank's core capital and total risk-weighted assets ratio. The committee also noted that NBK was performing well in terms of liquidity ratios, with a ratio of 40.4% compared to KCB's 35.6%.
Despite these concerns, the Treasury mandarins have pegged the takeover price at Sh5 billion, which is significantly lower than the Sh9 billion valuation by the legislators. The difference between the offer price and true value is believed to be shared between KCB staff and National Treasury mandarins.
The takeover bid has been hurriedly pushed by senior NBK officials, who have allegedly been cannibalising the bank before its acquisition. The officials have been diverting millions of shillings in loans being repaid by clients into personal accounts and declaring them bad loans.
The NBK board claims that the KCB offer is the only offer and thus the best, but this is disputed by the finance committee. The committee has expressed concerns that the deal has been rushed and that regulatory authorities, such as the Privatisation Commission and Capital Markets Authority, have not been involved in the merger.
Furthermore, the suspended Treasury cabinet secretary, Henry Rotich, has been accused of creating a false narrative that NBK would collapse if it is not taken over specifically by KCB. It is believed that Central Bank of Kenya governor, Patrick Njoroge, was arm-twisted to accept the takeover or risk getting a second term.
As the takeover bid hangs in the balance, 1500 NBK and KCB staff are set to lose their jobs if the deal goes through. One senior NBK manager is set to use his kickback from the takeover to finance his Makueni gubernatorial campaign in 2022.
Rotich had told the finance committee that the takeover presented an opportunity to avert a banking sector crisis, but the committee noted that NBK is performing well in terms of liquidity ratios. The committee is concerned that NBK is Kenya Revenue Authority's principal tax payment collector, hence a strategic government institution that cannot just be allowed to collapse.
As the controversy surrounding the takeover bid continues to unfold, an MP has threatened to expose lawyers involved in the legal fee payments and the amount involved.
