Kenyan lender KCB Group (KCB) is set to announce the sale of its subsidiary National Bank of Kenya (NBK), the Daily Nation newspaper reported on Wednesday, citing unnamed sources.

The value of the proposed deal has not been disclosed, the Daily Nation reported, adding the bank was likely to be sold to an unidentified lender from Nigeria.

KCB Group shares rose in early trading, standing up 7 per cent at 26.00 shillings ($0.1970) at 0645 GMT on the Nairobi Securities Exchange.

KCB, which is the second-biggest lender in the East African nation, acquired NBK, a medium-sized lender that was then controlled by the state, in a rescue deal engineered by the central bank in 2019.

KCB did not respond to a request for immediate comment, nor did the central bank.

KCB, which is scheduled to hold an investor briefing at 1300 GMT on Wednesday, had initially indicated it had invested in NBK for the long haul. However, narrowing capital adequacy ratios in the past two years may have prompted a rethink, said Eric Musau, head of research at Nairobi-based Standard Investment Bank.

NBK’s core capital to risk-weighted assets fell to 6.9 per cent at the end of September last year, below the minimum requirement of 10.5 per cent.

“They would have needed to recapitalise NBK,” Musau said, adding that KCB will be able to pay shareholders a return if the proposed sale is confirmed.

KCB has also acquired banks in other markets in the region in recent years, including an 85 per cent stake in Trust Merchant Bank in the Democratic of the Congo completed in late 2022, which has put further pressure on its own reserves.

• A Reuters report