The Competition Authority of Kenya (CAK) has approved the acquisition of the entire issued share capital of the National Bank of Kenya (NBK) by Nigerian lender, Access Bank.

The proposed transaction has been approved on condition that Access Bank retains, for a period of one year following completion of the transaction, at least 80 per cent of NBK’s current workforce and all Access Bank (Kenya) employees, its local subsidiary.

NBK has 1,384 employees while the acquirer’s Kenyan subsidiary has 316 staff members.

The authority says the proposed transaction will negatively affect employment since, post-merger, the acquirer intends to merge the operations of NBK and its Kenyan subsidiary.

The watchdog said the approval has been granted based on the finding that the transaction is unlikely to negatively impact competition in the market for financial services.

NBK was acquired by KCB Bank in August 2019 in a share swap where shareholders received KCB shares. It, however, did not change its name and has continued to trade separately.

Access Bank (Kenya), formerly Transnational Bank, has 23 branches across 12 counties in the country. It was acquired by the Nigerian lender in January 2020.

National Bank of Kenya controls NBK Bancassurance Intermediary, which engages in bancassurance. This entity is part of the transaction.

It also controls KCB Asset Management Ltd, which engages in fund management and investment advisory services. This entity is not part of the proposed transaction since it had been transferred to KCB Group.

“Post-merger, the acquirer intends to amalgamate the target and its Kenyan subsidiary, Access Bank (Kenya) Plc,” said CAK.

According to the Authority, the transaction met the Sh1 billion threshold for mandatory notification and full analysis.

Data from the Central Bank of Kenya shows that there were 39 licensed banks in Kenya as of December 2023. Nine banks were classified as tier-1, eight were tier-2, and 22 were categorised as tier-3.

“As of December 2023, the acquirer’s subsidiary, Access Bank (Kenya) was classified as a tier-3 bank and is ranked 37th out of 39 banks. On the other hand, the target is classified as a tier-2 and ranked 15th out of 39 banks,” said CAK.

As of December 2023, KCB Bank had the largest market share of 17.4 per cent followed by Equity Bank (12.2 per cent), NCBA Bank Kenya (9.2 per cent) and Co-operative Bank of Kenya (8.8 per cent) and Absa Bank Kenya at 6.6 per cent. Access Bank has 0.2 per cent market share.

By acquiring NBK, Access Bank’s market share will increase to 1.9 per cent, making it a tier-2 bank.

“The combined market size is unlikely to raise competition concerns since it is low. Additionally, the merged entity will face competition from the other banks in the market," said CAK.

"Based on the foregoing, the proposed transaction is unlikely to lead to a substantial lessening or prevention of competition in the market for the provision of banking services in Kenya."