Paul Russo, the NBK managing director tapped from KCB to oversee the integration, says the shift in strategy has been informed by the fear of losing business attached to National Bank.
"The two entities have different competencies and propositions. We will go back to the regulator about the model. Closing the brand comes with downsides because it is not automatic all customers will remain," Mr Russo said, Business Daily reported.
As a result, NBK will continue to operate as a stand-alone subsidiary of KCB, a departure from the earlier plan of integrating the operations of the two banks within two years.
KCB says it will inform the Capital Markets Authority (CMA) of the shift in plans to keep NBK as stand-alone subsidiary given that investors had been informed of the integration ahead of the merger.
NBK deposits dropped to Sh82.5 billion in September from Sh91.3 billion in June, a period when the market had knowledge of the merger crafted as rescue deal aimed at pulling the mid-tier lender out of its perennial low liquidity troubles.
The Competition Authority of Kenya had only compelled KCB Group to retain at least 90 percent of the employees for one-and-a-half years.
The latest development comes after the government lifted the capping of interest rates giving banks a free hand to set lending rates to their liking.