The Kenya Commercial Bank Group has been barred from firing National Bank employees after it completes the buyout of the lender.
KCB Group has been restricted by the Competition Authority of Kenya from firing at least 90% of the employees NBK will have at the time it completes the buyout. The jobs protection by the regulator will last for one and a half years.
KCB had earlier said that it would move to eliminate excess staff and branches in order to accelerate returns from the all-stock acquisition. A majority of the NBK employees can now rest assured that the regulator has protected their jobs.
The regulator, which is entrenching job protections in mergers and acquisitions, said this in a statement.
“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 statement read in part.
KCB has 4,835 employees in Kenya while NBK’s workforce currently stands at 1,356, the regulator said. Despite the regulatory constraint, KCB can still lay off 619 workers or 10 percent of the total staff count of 6,191.
The restriction by the regulator comes just days after NBK Managing Director Wilfred Musau lost his job to a KCB insider. KCB CEO Joshua Oigara appointed Paul Russo as the MD designate for NBK during the two-year transitional period as the lender becomes integrated with KCB.
Oigara had earlier said that KCB had no intention of keeping the NBK management but now the regulator is protecting jobs at the lender. However, KCB can still lay off the management as long as it does not surpass the 10% they are allowed to sack.
The CAK said 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.
KCB will take -over management of the NBK following approval by the Capital Markets Authority (CMA).