The Competition Authority of Kenya (CAK) has approved the buyout of National Bank of Kenya by Access Bank Plc on condition that the acquirer will retain at least 80 percent of the target's employees and all of the staff at the acquirer's local subsidiary - Access Bank Kenya - for one year.
Acquirers often cut jobs when they buy a company and integrate it into their existing operations in order to cut costs and raise efficiencies, with the regulator's decision offering temporary protection to employees against such layoffs.
CAK observed that the acquirer intends to merge NBK with its local subsidiary, resulting in elimination of some jobs.
"The transaction has been approved on condition that Access Bank Plc retains, for a period of one year following completion of the transaction, at least 80 percent of the target's current workforce and all Access Bank (Kenya) employees, its local subsidiary," the regulator said in a statement.
NBK, which is currently a fully owned subsidiary of KCB Group, has 1,384 employees, while the Kenyan operation of Access Bank has 316 employees.
In its ruling on the proposed acquisition by the Nigerian lender, CAK noted that the transaction is unlikely to have any negative implications on competition in the local financial services market.
“Whereas the transaction elicits negative public interest concerns, specifically regarding employment, the authority has imposed appropriate commitment/remedial measures,” CAK said in the ruling.
“The parties have committed to retain at least 80 percent of the target’s workforce and 100 percent of Access Bank Kenya employees for one year following completion of the transaction.”
The transaction had already received the green light from the competition regulator of the Common Market for Eastern and Southern Africa (Comesa), which said it is unlikely to affect trade or competition in the region and gave no conditions to the merger, subject to the approval of the Kenyan authorities.
NBK is currently a tier 2 bank and controls about 1.7 percent of the banking sector market share, while Access Bank Kenya is a tier 3 bank controlling 0.2 percent of the country’s financial services market.
“Post-merger, the market share of the acquirer will increase from 0.2 percent to 1.9 percent and the acquirer will be reclassified as tier 2. The combined market size is unlikely to raise competition concerns since it is low,” said CAK.
With the new market share, Access Bank is set to overtake several banks in the country, including Family Bank, Bank of India, SBM Bank, UBA Kenya and Ecobank Kenya.
