The Kenya Commercial Bank Group has been barred from firing National Bank employees after it completes the buyout of the lender. For the next one-and-a-half years the Competition Authority of Kenya (CAK) has ordered KCB Group to retain at least 90 percent of the employees that come with the National Bank of Kenya buyout in a bid to protect the employees jobs.
The country’s biggest bank by assets had threatened to terminate the contracts of ‘excess’ staff starting from the top and eliminate some branches in a bid to accelerate returns from the all-stock acquisition.
“The board has looked at the risk and what is the risk profile. The board does not intend to keep the management of NBK. The board has no intention of keeping the NBK board. There is no (such) intention,” KCB CEO Joshua Oigara had stated.
KCB had already started making good on their declaration to get rid of the senior management of National Bank of Kenya (NBK) once the takeover of the lender was complete. Just recently, Oigara appointed Paul Russo as the MD designate for NBK during the two year transitional period as the lender becomes integrated with KCB edging out Wilfred Musau.
A majority of the NBK employees can now rest easy after the regulator moves in their favour.
“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 a conditional approval to the proposed transaction would be appropriate,” the regulator said in a statement
KCB which has 4,835 employees in Kenya will now have to retain a huge percentage of NBK’s workforce of about 1,356 employees. Combined the total staff count of the merger adds upto 6,191 employees and despite the regulatory constraint, KCB can still lay off 619 workers.
CAK also stated it approved the buyout partly because KCB will be in a position to support NBK whose performance has deteriorated over the years, with the lender breaching the minimum capital adequacy ratios.