Category Archives: CBK

Caritas MFI Bank Launched

Thursday saw the official launch of the Caritas Microfinance (MFI) Bank in Nairobi. Caritas MFB,  which is owned by the Catholic Archdiocese of Nairobi, was licensed by the Central Bank of Kenya in June 2015. It has since mobilized almost Kshs 400 million in deposits and advanced Kshs 250 million of loans.

Caritas plans to go from having two branches, now serving 10,000 customers, to five by year-end and increase its authorized agent network from 16 to 50. Already 70% transactions are done using mobile banking and through a partnership with Cooperative Bank, Caritas customers can use Coop Bank ATM’s and visa cards for purchases and this will enable another potential 100,000 “unbanked and under-banked” members of 200 self-help groups in Nairobi and Kiambu counties to access formal banking services.

MFI’s were excluded from the interest cap law of 2016. Other deposit-taking microfinance bank institutions include Choice, Daraja, Ideal (formerly REMU), Maisha, SMEP, Sumac, U&I, and Uwezo. Larger ones include KWFT and Faulu  as well as the Chase Bank-owned Rafiki MFI that was quite large and growing fast. It is independent of Chase Bank but a lot of its future growth is dependent on the outcome of the Chase receivership.

Kenya Green Bonds Launched

A few days ago saw the launch of green bonds in Kenya with the signing of a memorandum of understanding between the Kenya Bankers Association, Nairobi Securities Exchange (NSE) and Financial Sector Deepening Africa (not FSD Kenya). Through this, they hope to deliver lower cost funds through capital markets to finance green projects. China is actually the leader in this along with India, but Kenya, as part of a climate bonds initiative, will be the flagship for green bonds in Africa.

NSE CEO Geoffery Odundo NSE Odundo said green bond listings at the NSE would attract impact investors while Kenya Bankers Chairman, Lamin Manjang said they hoped the first green bond would list at the NSE this year. FSD Africa has committed $600,000 to this and the IFC will partner with KBA to determine green portfolio i.e. projects that quality for such finance, from sectors such as energy, agriculture, infrastructure, transport, manufacturing. Other actives to be undertaken include and enabling small banks to take part in financing the pipeline, extending green bonds across East Africa, creating a pool of Kenya green finance experts, and promoting green Islamic finance.

More on renewable energy project finance in Kenya.

Chase Bank EOI 

Yesterday the Central Bank of Kenya (CBK) invited new investors to express interest in buying into Chase Bank as they also extended the management period of the bank by another six months. When the CBK governor met depositors last November, he indicated that he hoped that the deal would be concluded by the first anniversary of the closing of Chase Bank (April 7), but that has now been pushed back. Last week, the Governor also said that nine banks were interested in opening shop in Kenya.
  • Following the receipt and evaluation of EOIs, a shortlist of qualifying investors (“Shortlisted Investors”) will be granted access to a haseomprehensive confidential data room to develop a formal proposal to acquire Chase Bank (Kenya) Limited. The Shortlisted Investors will be determined in a fair process using appropriate and objective criteria based on, inter alia, regulatory imperatives and prudential guidelines which will ensure a speedy and optimal recovery for depositors, creditors and other stakeholders of Chase Bank (Kenya) Limited, whilst also mindful of seeking to preserve and develop a sound and innovative banking system in Kenya.
  •  The deadline for applications is April 21, and CBK has appointed KPMG as its advisors in this process. EOIs should include the following key areas: Interest in banking in Kenya, ownership details, management skills, adequate capital, financial resources, liquidity availability and the proposed transaction structure. 
  •  No information beyond what is already available in the public domain will be made available to interested parties and there will be no question and answer process at this stage.
  • Following the receipt of EOIs, shortlisted Investors will also be granted access to a “Data Room ” to develop their investor proposals (from May 3)

May 2 update (PDF) from the Central Bank of Kenya:  12 replies to the EOI were received. The respondents comprised of three Kenyan banks, four foreign banks, and five other financial institutions and consortia. The shortlisted ones will now be given access to confidential data and are to return their proposals by June 9.

M-Akiba: Kenya’s new government bonds that are bought by phone

Today saw the launch of M-Akiba, a long awaited product that through which ordinary Kenyans tcan buy government bonds on their phones, using mobile money. The can purchase units as small as Kshs 3,000 (~$30) and earn 10%.

Some tweets about the events today: 

  • The Central Bank of Kenya governor (@njorogep) said  #MAkiba bond is in line with @CBKKenya strategy to increase the level of financial inclusivity in the economy – @NSEKenya   
  • #MAkiba is a collaborative initiative between @NSEKenya @KeTreasury @cdsckenya @SafaricomLtd @AIRTEL_KE @KCBGroup – @NSEKenya
  • Phase One of M-Akiba Runs for 3 weeks targeting Sh150M. Main offer targeting Sh4.85Bn in Q2-Q3 Will run for 3 Months – @kenyanwalstreet
  • M-Akiba bond has so far been Ksh. 535k purchased. I am surprised Kenyans were this interested. So far highest buy is at Ksh. 50k – @MumbiWarui
  • Day One Of M-Akiba; Bonds worth Ksh 1.0 Million Bought Via Mobile Phones In the first 60 Minutes http://kenyanwallstreet.com/m-akiba-retail-bond-goes-live … @kenyanwalstreet
  • To trade #MAkiba bond open a CDS account by dialling *889# either on @SafaricomLtd @AIRTEL_KE .The initial investment per account is 3,000. – @NSEKenya
  • CDSC to manage the register of the bond, offer IPO managements system and the depository and settlement services on behalf of the government – @cdsckenya
  • We have just witnessed the launch of the first M-Akiba bond at the Treasury. It has a coupon rate of 10%p.a.Tradable through the phone.- @JimnahMbaru
  • The #MAkiba bond entry level is kshs 3,000 compared to the current entry point of Ksh 50,000 for any govt securities. @M_AKIBA2017 – @NSEKenya
  • #MAkiba bond is a tax free bond that will attract a 10% interest paid biannually within a period of 3 years @CMAKenya @cdsckenya @CBKKenya – @M_AKIBA2017
  • We are receiving A LOT of transactions per sec. In case of any delays, please just try again. Thank you for the overwhelming response so far – @M_AKIBA2017
  •  UPDATE: Subscription figures- @AIRTEL_KE  Airtel Money -1,300 @SafaricomLtd  MPESA-420 Total collection KES 2.4 million. AS AT 4PM TODAY – @M_AKIBA2017

Some Blogs:  

EDIT

  • M-Akiba is a three year fixed coupon infrastructure “special limited offer” bond
  • Issue number MAB1/2017/3
  • Amount Kshs 150 million (~$1.5 million) issued in March 2017
  • Apply by *889#, and runs from 23 March to 7 April and will be allocated on a first come first served basis
  • Minimum investment is Kshs 3,000, maximum investment is Kshs 140,000 (~$1,400) per day
  • Coupon 10% a year
  • Bond will be listed on the NSE and will be tradable by phone from April 11
  • Trading commission is 0.1% of actual allocations
  • M-akiba interest is tax exempt
  • Pays interest every 6 months: on (2017) 9 Oct, (2018) 9 April, 8 Oct., (2019), 8 April, 7 Oct., (2020) 6 April
  • From a prospectus in a local newspaper.

Notes

‘Akiba’ means  ‘savings’  in Swahili
$1 = Ksh 103

Diamond Trust & Habib: Bank Mergers & Musical Chairs – Part III

See Part I and Part II 

  • An unexpected piece of news today was the announcement that Diamond Trust intends to acquire Habib Bank.  Diamond Trust is Kenya’s  sixth largest bank with assets of Kshs 230 billion (September 2016), while Habib is number 34 with assets of Kshs 11 billion. The banks have a common shareholding though the Aga Khan network. EDIT: the purchase will be done by the issuance of 13.28 million shares of Diamond Trust at Kshs 137.39, valuing the deal at Kshs 1.82 billion. Other shareholders of Diamond Trust will be diluted by 4.75%.
  • A week earlier, the Central Bank of Kenya also announced that it was in the process of licensing two new banks – DIB and Mayfair. DIB Kenya is a wholly owned subsidiary of Dubai Islamic Bank, a leading sharia compliant bank from the United Arab Emirates. DIB is not associated, and won’t want to be linked to the Dubai Bank that’s currently in liquidation.  Mayfair Bank is owned by a diverse group of Kenyan investors with interests in various sectors (including politics)
  • Also, a decision on Chase Bank is expected in the next few weeks. A target had been set to restore the bank back to indecent owners by the first anniversary of it being put into receivership. A merger or buyout is likely.
  • More mergers expected with the credit squeeze on small banks?

Edit

From a Diamond Trust newspaper release

  • Habib is the largest private bank in Pakistan with 1,673 branches in 22 countries. The deal will enable DTB to establish relationships with frontier markets in Asia where Habib has operations and this is also in line with the CBK policy of consolidation in the Kenyan banking sector.
  • The lead transaction advisor for the deal was Pacifis Advisory, assisted by PWC while Anjarwalla & Khanna was the lead legal advisor.