A parliamentary committee is Wednesday expected to start investigations into the controversial takeover of National Bank of Kenya (NBK) by Kenya Commercial Bank (KCB) as the process runs into headwinds after Nyatike MP Tom Odege questioned the move.
The Finance and National Planning Committee chaired by Kipkelion East MP Joseph Limo has 60 days to present a report to the House, following a directive from Speaker Justin Muturi.
“Hon Odege has raised a very important matter, whether there was public participation before the takeover,” Mr Muturi reminded the committee.
Mr Odege says the proposed take should be investigated to clear doubts surrounding the process to establish whether it was subjected to public participation as required, as opposed to boardroom dealings between the two banks.
The legislator further notes that because the bank is almost bankrupt, it is important to establish whether it was properly valued at Sh5 billion if the interests of pensioners and taxpayers have to be safeguarded.
Mr Limo’s committee will also establish why the acquisition process was single- sourced and whether the government is trying to create a monopoly in the banking sector.
How the management of both banks arrived at the deal, whether it is above board or a unitary decision ‘intended to fleece’ the shareholders and if it is the best way to privatize the bank, are other issues to be canvassed at the committee.
But as MPs investigate the matter, approvals by regulatory authorities including Capital Markets Authority (CMA), Central Bank of Kenya (CBK), and Competition Authority of Kenya (CAK) lie in the way.
CMA Act requires that an independent advisor carry out an independent valuation of NBK to be included in shareholders circular for approval. However, there is no indication this was done.
The MPs will also be seeking clarity on why the rights issue proposed and approved was never carried out?
If actualised, KCB will largely benefit from NBK’s Sh100 billion in customer deposits and huge value in property assets and its infrastructure across the country.
It will also mean that the National Treasury has made a decision on its 1.135 billion preferential shares it holds in NBK jointly with the National Social Security Fund (NSSF) a decision the two shareholders were unable to resolve when the bank proposed a Sh10 billion rights issue in 2013.
It should also be noted that after converting the preference shares to ordinary shares, NSSF and Treasury will then have a combined ownership of 93 percent of NBK and would therefore easily delist and force minority shareholders out without requiring their approval.
There has been a general consensus among the NBK stakeholders to have the bank go for a rights issue for purposes of recapitation especially after the valuation of the bank’s assets had been done.
“Why a few individuals decided it fit to have the bank acquired by KCB for the paltry amount yet there was an even more effective way of raising capital is a matter that should concern every Kenyan,” Mr Odege says.
It is also not clear why the Government of Kenya- the largest shareholder is not keen on giving NBK business support that it needs to bounce back to business status yet the same has been done to other banks, which are actually Multinational Corporations (MNCs).
But the MNCs end up sending profits to their mother countries.
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