KCB Group has been instructed by the Competition Authority of Kenya (CAK) to retain 90 percent of its workforce for a period not less than one and a half years, after the buyout of National Bank of Kenya.
KCB had initially said it would move swiftly to eliminate excess staff and branches to maximize profits from the all-stock acquisition.
“In order to strike a balance between addressing the public interest concerns and accommodating the strategic intent of the merging parties, the Authority was of the view that granting conditional approval to the proposed transaction would be appropriate,” read a statement issued by CAK.
The buyout of NBK by KCB was approved because the former’s performance had deteriorated over the years, with the bank breaching the minimum capital adequacy ratios.
CBK-set minimum capital adequacy ratios are 10.5% for core capital to risk-weighted assets, and 14.5% for total capital to Risk-weighted assets.
To allow for a smooth transition, NBK will continue running independently for two years after the acquisition. After the transition period, the reduction of NBK’s staff count of 1,356 workers is set to start.
Mergers and acquisitions often lead to massive layoffs as companies cut down on their expenses and improve efficiency.
In 2018, NBK already spent KSh541.2 million in laying off employees who willingly retired most of them from top roles in the bank.
Even with the new directive, KCB can still lay off 619 workers or 10% of the total staff count of 6,191.