An independent evaluation report commissioned by the NBK board says shareholders will lose 30 percent of their share value if the take-over bid succeeds.
KCB has floated to buy NBK at a price of 3.8 shillings per share which is currently trading at 4 shillings on the Nairobi Securities Exchange.
Directors of National Bank of Kenya in a circular to their shareholders have raised concerns with the buyout deal by KCB Group saying the offer undervalues the company by almost 38 per cent.
The share offer by KCB group values NBK at 5.6 billion shillings, though an independent valuation report puts a value of 9 billion shillings.
However the board caution that it may be forced to proceed with the CBK offer since no strategic investor has shown interest in acquiring the financially troubled lender.
The board in the circular is urging it shareholders to advice the board on whether to freeze the offer or give a nod.
If the shareholders approve the offer, the deal will now be at the mercies of the competition authority of Kenya, capital markets authority and the central bank of Kenya.
National bank of Kenya which was started in 1968 is 48.1 percent owned by the national Social Security Fund while the national treasury controls 22.5 percent of the bank.
The public owns the rest of the shares.
Three years ago, pensioner successfully opposed government’s proposal to sell part of the bank to a strategic investor to ease its financial constraints.