CAK okays KCB – NBK merger deal with conditions

The competitions authority has stopped Kenya commercial bank from firing National Bank of Kenya employees after the merger of the two lenders.

The authority has given at least 90 percent of the National Bank of Kenya workers an eighteen months lifeline saying it is in line with global best practices.

This is after KCB said it is planning to carry out an organizational restructure that will result in job losses for some NBK employees.

Last week, the National Bank and KCB merger deal received the final approval from the Central Bank of Kenya and the Capital Markets Authority paving way for the merger of the two banks.

NBK Chief Wilfred Musau was the fast casualty of the merger after his position was taken over by KCB’s head of regional business Paul Russo.

In a statement KCB had said that Russo was to head the transition team for a period of two years as NBK is fully integrated in the operations of KCB.

The transition period will serve to “streamline human resources, systems, processes and procedures” to realize efficiency and productivity synergies, a dispatch from KCB said.

Following the acquisition of NBK, a majority of the workers who stand at 1356 are set to lose their jobs as KCB moves to streamline the activities of the two lenders.

However, the competition authority has put a caveat on the planned downsizing exercise by KCB saying at least 90 percent of the merged entity’s work force should not be relieved off their duties for a period of 18 months.

However, it is not clear what will happen to various managers of NBK and KCB who are on contract. KCB employs 4,835 workers and the extra NBK workload is likely to exert overhead pressure on the merged entity’s bottom-line.

NBK which is a tier 2 lender has a market share of 2.37 percent while KCB controls 14 percent of the tier 1 segment of the market.

Following the merger, the market share of KCB will stand at 16.51%, making it the largest bank in the region in market share and capitalization.

  

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