Category Archives: Consolidated Bank

Safaricom & Mercesdes

With some ministers very quiet on the job these days, some key permanent secretaries are speaking more about their ministry policy directions and plans for the rest of the year.

Communications
Dr Bitange Ndemo, the Permanent Secretary in the Ministry of Communications gave an interview this week where he revealed that:
– Telkom will be restructured in the next few months and privatised by the end of the year. This is urgent because the value of Telkom is decreasing each year and the restructuring, estimated to cost 50 billion shillings, will be financed by the sale of 9% Safaricom to Vodafone.
– The licensing of a second national operator, – FORGET ABOUT IT, as Telkom already faces enough competition

Finance
– Joseph Kinyua, the Finance PS announced that government would privatise National Bank by the end of the year.
– Consolidated bank will also be sold to another party. The previous owners of Consolidated have expressed interest in re-aquiring the bank’s assets.
– He also announced that the government will follow in the steps of Rwanda and limit purchases of government limousines. Good luck, as we’ll keep any eye out for any new GK giants like the all new Merc S Class.

– Sector documents from the Ministry of Finance are now available at their web site

Aid plan for government Banks

The World Bank has laid out a comprehensive reform plan for Kenya Commercial Bank, National Bank of Kenya, Consolidated Bank, and Industrial Development Bank. The Financial Sector Reform Credit (FINSERC) Project involves $65m in aid, and is staggered to ensure that the governmentprivatises and restructures the banks in a timely manner. (PDF here)

2004 Banking Summary

March 31st was the deadline for all Kenyan Banks to publish their annual reports for the year ended in a daily newspaper. This is a commendable requirement of the Banking Act, that the government should also extend – and require all commissions of inquiry, constituency development funds, special projects, catering and fuel levy, city councils, ministry and all government body budgets etc to publish their 2004 income vs. expenditure and budgets for 2005. Sure it will make a lot of money for newspapers, but the greater good is an informed public with a greater awareness of how their taxes are spent.

Banking is Good
Anyway, as for banks, 2004 was a good year, despite the lower interest rates. Most of Kenya’s 43 Bank’s were profitable, with few exceptions posting losses. Only 4 (Consolidated, Akiba, Fina & Oriental) of Kenya’s 43 banks posted losses – the rest had profits that varied from 23 million at Middle East Bank to 5.4 billion shillings (before tax) at Barclays.

Barclays will distribute its 5.3 billion as follows: (1) Barclays Plc (UK) 36.2% (2) Kenya Government 31.5% as taxes (3) 15.6% will retained profits, and (4) local shareholders will receive 16.7% (a dividend of 14 shillings per share for 2004)

Political interference in Banks?

Industrial Development Bank: The takeover of IDB’s current account business leaves more questions than answers. On what basis was Equity selected? Was there a tendering process open to all banks and financial institutions? Given that the assets of a public (state-owned) bank are being transferred to a private Bank, is this not a form of privatisation – that must be approved by Parliament?

Consolidated Bank:  Also, the previous owners of collapsed banks that were folded into Consolidated Bank are pushing the Ministry of Finance to turn over the Bank to them – claiming they are the true owners of the Bank.

Banking News

Postbank Modernises:  Postbank has earmarked 230 million shillings for expansion including an online payment and ATM network. They are also seeking to amend the KPOSB Act 493 of 1978 that set up and governs the Bank. The Bank, which was set up to encourage Kenyans to save, is not allowed to give loans, and they would like to offer micro-finance and consumer loans at their 47 branches nationwide.

Bank to auction land:  Bank of Baroda will auction off the 8,300-acre farm that used to be Chemelil Sisal Estate in South Nandi at a cost of 78 million shillings. This stems from 3 loans the directors of the company took between 1971 and 1988, that were never paid and accrued huge interest arrears. The farm has 2,000 squatters who are demanding the right to buy sections of the farm, as they have lived there for many years.

Privatisation in Kenya: (The People Feb 21) The government is considering selling its stake in three banks which it controls. National Bank, which is valued at 4 billion shillings, has attracted offers from several investors, the highest being only 500 million. This is mainly because the Bank has non-performing loans of 17 billion, 11 of which is owed by the government. Other Banks on the list are Consolidated Bank and Industrial Development Bank. The newspaper urges the government not to sell these Banks below their value, despite their various problems.

Privatisation in Tanzania:  After a review of technical and financial bids, three banks – Radobank Nederland, Standard Bank (SA) and Akiba Commercial Bank – have been short-listed to bid for a 49% stake in the National Micro Finance Bank of Tanzania. (East African Feb 21)

More SMS: Prime Bank is the latest bank to offer SMS banking to its customers.