Category Archives: Chase Bank

Coop Bank 2017 AGM

Cooperative Bank (Coop Bank) shareholders had their 2017 AGM in Nairobi where the directors proposed a Kshs 0.8 per share dividend as well as a bonus share for every five held.

At the AGM, their CEO, G. Muriuki, spoke of continuing the turnaround at the bank which had a Kshs 2.3 billion loss in 2001 when they had 100,000 customers – and on through 2016 when they had Kshs 353 billion of assets, Kshs 18 billion profits, 149 branches, and  6.2 million customers. The cooperative sector remains the heart and identity of the bank, and they will continue to provide services to the sector.  The cooperative movement also forms the anchor shareholding of Coop Bank with a 65% stake.

Most amazing, he said, was the digital transformation at the bank. Some years back, McKinsey had identified 60 services done at their branch that could be decentralized – and now, only 15% of transactions are done at the branch – with customers doing the bulk of transactions on mobile phones, at ATM’s, agents, and on the internet – and this had seen the Bank’s cost/income ratio reduce from 60% to 50%

At the AGM, there was also discussion on some challenges such as court cases & loan provisions, funds at held Chase Bank and hyperinflation in South Sudan which has resulted in losses. Some shareholders also asked if they could have the annual report mailed to them via post offices and also had other queries on issues like diaspora banking services, staff fraud, PesaLink, interim dividends, the bank’s share price, transport fare to attend the AGM, cyber crimes, and interest rate caps. In answering one question, the CEO said Cooperative Bank was not one of the bidders for Chase Bank as they had a presence similar to Chase and would focus on growing organically.

The  CEO also said this year marked the third bonus share issue since the bank had listed in 2008, and this was good for shareholders as the bank had grown its capital without asking shareholders to put in more money.  Coop Bank had a livestream of the AGM for any shareholders who were unable to attend the AGM, and more companies should do this for investors awareness

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.

Two Rivers Development Bond

Peek at the Two Rivers bond prospectus

This week Centum investments announced a Kshs 2 billion one year 14.5% note for the Two Rivers Development Limited – which is 58% owned by Centum, 39% by Avic, and 3% by ICDC.

Two Rivers had a facility of Chase Bank to finance infrastructure developments, which they had drawn on partially when the bank closed. They also had Kshs 650 million of deposits at Chase.

Two Rivers owns 50% of Two Rivers Lifestyle Centre and 100% of phase two of Two Rivers, apartments, and offices. 50% of the mall, the largest in Sub-Saharan Africa (i.e. outside South Africa) which opened on Valentines’ Day was sold to Old Mutual in 2015 for Kshs 6.4 billion. Two Rivers Development was valued at Kshs 41 billion in March 2016.

To pay for the retirement of the bond, they are selling 11 plots of land (some residential, some mixed use, one for a hotel) which have a combines market value Kshs 6.6 billion, and a mortgage value of Kshs 5.6 billion. Interest will be paid at maturity, and the note is guaranteed by Centum Investments.

The Centum investor briefing (PDF) for 1Q2107 identifies education, leasing, and agribusiness as key areas of growth at Centum in the future.

$1 = Kshs 103

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.

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.