The Kenya Commercial Bank (KCB) will be acquiring the National Bank of Kenya (NBK), in a transaction that will make the deal the second largest in the local banking industry.

The KCB/NBK acquisition is expected to be completed in October this year. Both KCB and NBK are listed on the Nairobi Securities Exchange (NSE).

KCB, which is the biggest lender in Kenya by assets, offered to buy NBK through a share swap of one of 10 ordinary shares of NBK for every 1 ordinary share of KCB, approximately Sh4.19 each share of the National Bank.

According to KCB group, it will run NBK as a stand-alone subsidiary for about two years before integrating operations.

The KCB/NBK  consolidation is the latest in the banking industry as banks move to consolidate as a survival tactic, following the lending interest cap by treasury in 2016.

FINANCIAL INCLUSION

KCB Group CEO and MD Joshua Oigara said the transaction fits within KCB’s expansion strategy and gives it a stronger edge to play a bigger role in driving the financial inclusion agenda in the East African region while building a robust and financially sustainable organisation.

“The proposed transaction will further consolidate the banking sector in Kenya and will create stronger institutions enabling KCB to play a bigger role in the financial inclusion agenda. The acquisition would accelerate the Group’s growth ambitions and enhance value to all stakeholders,” said Mr. Oigara.

CBA Group is also set to merge with NIC bank to form the third-biggest bank by assets in East Africa.