Nigeria’s Access Bank, the country’s largest bank by assets, is in the final stages of acquiring the National Bank of Kenya (NBK) from KCB Group, marking a significant step in its pan-African expansion strategy. The deal, which was initially expected to close five months ago, will bolster Access Bank’s presence in Kenya, East Africa’s largest economy and a key financial hub.

KCB Group CEO Paul Russo confirmed on Wednesday that the acquisition is progressing, with NBK’s performance already factored into KCB’s 2024 full-year results.

“We are at advanced stages of regulatory approval from both sides. I am very confident that we are at the tail end of this process,” Russo stated during the bank’s FY 2024 results announcement.

Regulatory Hurdles and Conditions

In October 2024, Kenya’s Competition Authority (CAK) approved the transaction under specific conditions:

  • Access Bank must retain at least 80% of NBK’s 1,384 employees for one year post-acquisition.
  • All 316 employees of Access Bank Kenya, its local subsidiary, must also be retained.

The approval brought the deal closer to completion, but regulatory delays have extended the timeline. KCB Group’s CFO, Lawrence Kimathi, explained that the long-stop date was pushed to February 2025 due to pending approvals.

“We’ve now secured approval from the Central Bank of Nigeria (CBN), and the only remaining approval is from the Central Bank of Kenya. Access Bank has formally communicated its commitment to closing the transaction,” Kimathi added.

Financial Impact on KCB Group

KCB’s 2024 financial results reflected the pending sale. The group reported a balance sheet of KES 2.0 trillion ($15.4 billion), the largest in the region. However, total assets declined by 10%, partly due to the appreciation of the Kenyan shilling against regional currencies.

Deposits and loans also saw a dip, influenced by the reclassification of NBK’s balances. Excluding NBK’s impact, loans grew by 10.5%, while deposits shrank by 0.1%.

Deal Value and Market Implications

While the exact value of the deal remains undisclosed, KCB had previously agreed to sell NBK at 1.25 times its book value. Based on NBK’s 2023 book value of $79.77 million, the acquisition is estimated at around $100 million.

Upon completion, Access Bank will significantly expand its footprint in Kenya, adding NBK’s 77 branches across 28 counties to its existing 23 branches in 12 counties. Despite this growth, the merged entity will hold a modest 1.9% market share, which CAK believes will not disrupt competition, given the dominance of major players like Equity Bank, Co-operative Bank, and Standard Chartered.

Strategic Growth for Access Bank

Currently ranked 37th out of 39 licensed banks in Kenya, Access Bank is classified as a tier 3 lender. Acquiring NBK, a tier 2 bank, will strengthen its market position and enhance its growth prospects in Kenya’s competitive banking sector.

This acquisition underscores Access Bank’s commitment to expanding its influence across Africa, leveraging Kenya’s robust financial ecosystem to drive its pan-African ambitions.