National Bank of Kenya’s share (NSE: NBK) has risen to a one-year high of Sh9.85 after it received a capital boost from the National Social Security Fund (NSSF) and reports of a planned acquisition by Kenya Commercial Bank (NSE: KCB)
, whose share price has slipped following news of the proposed takeover.
The proposed takeover of struggling NBK, which came to light at the beginning of last week, would be through a share swap with KCB investors likely concerned about their bank absorbing the lower quality book of the smaller lender.
NBK gained 40.7 per cent last week to close at Sh9.85 a share on Friday, from Monday’s Sh7 opening price.
On the other hand, KCB closed the week at Sh37, having dropped by 7.5 per cent from Monday’s opening price of Sh40.
“Selling interest in KCB could be attributed to the news of its acquisition of a 70 per cent stake in National Bank of Kenya Ltd through a share swap,” said Genghis Capital in a market note. State-run pension scheme NSSF currently owns a 48.05 per cent in NBK.
Last week the pension fund advanced the lender a Sh2.9 billion shareholder loan to boost its capital ratios which have fallen below the regulatory minimum.
The Treasury holds a direct stake of 22.5 per cent in NBK and it is expected to put Sh1.4 billion in the bank.
Analysts at Genghis Capital estimate that KCB would need to issue about 38 million shares to the NSSF and the Treasury if it is to acquire part of their stock in NBK to raise its 70 per cent target.
KCB’s stock has been one of the top gainers in the market this year, part of a bank stocks’ resurgence that has underpinned a market rally in the second quarter.
The stock was trading at Sh28.75 at the beginning of the year, giving it a 28.7 per cent year-to-date gain.
NBK’s price rise in the past week has seen it vault to the top performer among banks this year with a year-to-date gain of 36.8 per cent, having opened January at Sh7.20.
