Category Archives: Credit Bank

President pledges NSE Revival through IPOs

President William Ruto visited the Nairobi Securities Exchange (NSE) and rang the opening bell, then listened to financial and government leaders explain the situation in the financial markets.

  • NSE Chairman, Kiprono Kittony lamented that there had been no new government listings in 13 years. This stems from challenges and long procedures in the privatization process and they have had talks with Moses Kuria, the designated Cabinet Secretary for Trade, Investment and Industry,.
  • James Mwangi CEO of the Equity Bank CEO said his group was the ultimate hustler fund that grew from being a Nyagatugu village mutual fund, owned by 2,500 farmers. In 2005 and 2006 it converted into a bank and listed on the NSE which enabled them to then raise $185 million (Kshs 11 billion) from Helios. Today, the original investors have seen a 159,000% return on their investment and Equity, with Kshs 1.4 trillion of assets, has the sovereign fund of Norway (Norfund) and the World Bank Group as its largest shareholders.  
  • Lengthy Privations: Engineer Kinyanjui of the PPP said privatization as currently structured has 16-17 steps and each takes 5 months. The government owns Kshs 426 billion of investments (at the NSE) and can’t sell one share without going through a privatization law process. Entities like ICDC (now under KDC) have mature investments they are ready to exit from and support the government program and the delay in privatization means that when they divest, there is an erosion of value. 
  • Pension Opportunity: Hosea Kili, the Managing Director of Laptrust said the Lamu Port, SGR and Nairobi Expressway could have been financed by the local pension industry if they had been structured for them and lamented that they are unable to deploy funds as there are no new listings. He added that Laptrust plans to list Kshs 7 billion of their Kshs 17 billion property portfolio as an I-REIT. 
  • The National Social Security Fund (NSSF) boss said that 15 million Kenyans are not in any pension schemes. At the same time the NSSF, which has shares in 29 listed companies, is 3% of the NSE, has reached the limits of what it can invest in some counters.  

After listening to leaders, President Ruto said the government would revive the capital markets by privatizing and listing 5-10 state enterprises in the next 12 months and that the government would also seek to float a domestic dollar-denominated bond.

He directed that the government review of privatization law to review sections that inhibit the process, or he would move to repeal it. He also asked private companies to step forward and list and said the government was willing to remove some impediments including forgiveness of some tax sins. 

In his closing remarks, the President: 

  • Announced that Bio Foods and Credit Bank have obtained approvals to list at the NSE.
  • Invited the pension companies to a meeting at State House a few days later. 
  • He also put a fire under the boards of Nairobi International Financial Centre and the Privatization Commission for not delivering.

Here’s a stream of the launch of the enhanced NSE Market Place event

Bank Mergers & Musical Chairs in 2016

There’s a moratorium on new banks licences, but still a lot happening in the ownership suites.
Who’s In
  • Bank M (of Tanzania) has bought out and rebranded (the former) Oriental Commercial Bank.
  • Sidian Bank: Centum bought out and rebranded (the former) K-Rep bank.
  • Spire Bank: Mwalimu SACCO bought out and rebranded (the former) Equatorial Commercial  bank.
Who’s Hanging On
  • Chase bank now reopened, but yet to resume lending. An ownership decision  is expected soon (process being managed by KCB)
  • Credit bank:  Discussions are ongoing about a sale to  FEP Holdings
  • Imperial bank (assets will be assessed and managed by NIC bank)
Who’s on the Way Out
  • Dubai bank (proceeding into liquidation)
  • Giro bank which has been bought out by I&M bank.
  • edit The CFC brand as CFC Stanbic Bank and CFC Stanbic Holdings (i.e group) becomes Stanbic Bank Kenya and Stanbic Holdings PLC respectively  – this comes about nine years after their merger of CFC and Stanbic banks.

Bank Review ’07 Part II

Small banks, range from $40 to $100 million

Showed an inability to grow as faster as the bigger bank, with few exceptions. Yet they are still profitable and reluctant to merge

The banks got a temporary reprieve when parliament shot down the government’s proposal that banks should have a minimum capital of 1 billion ($15 million) 3 years from the current 250 million shilling minimum’ but that proposal is likely to be revisited by future finance ministers.

35. (38) Fidelity Bank: Estimated assets 3.2 billion ($45.7M), profit of 45 million ($0.7 million) shillings for this quiet bank with little marketing activity but which was able to grow 40% during 2007.

34. (36) Credit Bank: Estimated assets of 3,300 million and profit of 120 million, for another quiet bank which grew about 15% in 2007.

33. (33) Middle East: Estimated 3.2 billion assets and profit of 80 million in 2007. However deposits and loans are down 6% from a year ago.

32. (35) Habib Bank: Estimated 3.5 billion assets and profit of 90 million, with growth of 12% from a year ago. Participated in the first Diamond trust rights first issue as a possible merger step.

31. (29) Victoria: Estimated 4.2 billion assets 140m in profit. Flat growth expect in loans and deposits (1%), but great in profitability which is improved by over 40% in 2007.

30. (32) Consolidated Bank: Estimated 4.5 billion assets, 20 million profit with the 30% growth from a year ago. There was public fallout between the MD and the board resulting in the board being fired by the Finance Minister. The Deposit protection fund (DPF) of the Central Bank plans to sell its 51% stake to private sector, and is likely to be found next year by private sale. A loss in 2005 makes the bank ineligible for an NSE listing and the owners the collapsed banks that form Consolidated Bank are likely to figure in as potential buyers.

30. (31) Equatorial: 4.7 billion assets and 90m in profit. The Sameer group bank Out-performed corporate big sister CBA growing by about 15% in 2007.

29. (34) Development Bank of Kenya: Estimated 4.8 billion and 200m in profit. Remarkable growth fro a development finance institution to record 45% growth in loans & deposits. Part of ICDC’s (Government) 90% stake in the bank is up for sale in 2008.

28. (28) Southern Credit: Estimated 4.9 billion assets, 80m in profit. 10% growth in loans and deposits, with about 40% growth in profits in 2007. Bank with a lady MD focus on cards

27. (30) Chase Bank: Estimated assets of 5.0 billion, and profit of 130 million. The winner of small bank awards, will open new branches next year and has set about achieveing a recapitalization target of 1 billion, through retained earnings.

26. (26) Giro: Estimated 5.3 billion assets, 70m in profit. With 7% growth in the year, It was supposed to be sold to state bank of India, but the deal is yet to be approved by regulators.

25. (27) Guardian: Estimated 5.8 billion assets, 45 million profit. Growth of about 15%

24. (23) ABC: Estimated 5.8 billion assets, 170 million in profits. With 12% growth from a year ago, ABC was one of the few ‘small’ banks that had a marketing push to target new customers in 2007 in addition to a recapitalization drive. Launched ‘kisima’ a flat fee account and has new branches.

23. (24) Habib AG Zurich: Estimated 6.1 billion assets, 200 million profit for another quiet bank which grew about 15% in 2007.

22. (25) K-Rep: Estimated 7.2 billion assets, 200 million profit . With international shareholding and micro-finance expertise is an natural candidate for a merger Was 29th two years ago and recorded about 60% growth in 2007.

21. (21) Bank of Africa 7.2 billion ($103 million) assets 160 million shillings ($2.3 million) profit in 2007. What is hopefully the first of many West African banks spreading eastwards has opened new branches and targeted growth of new business like asset finance.
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