Category Archives: Diamond Trust

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.

 

Kenya Bank Rankings 2015: Part I

Ranked by assets (and placing in 2014)

1 (1) KCB [Assets of Kshs 467 billion ($4.59 billion), and profits of Kshs 23.44 billion ($230 million)]

2 (3) Equity Bank

3 (2) Cooperative

4 (4) Barclays

5 (5) Standard Chartered

6 (7) CFC Stanbic Bank

7 (6) Commercial Bank of Africa

8 (8) Diamond Trust

9 (10) NIC

10 (9) Investment & Mortgages

==

Two banks in the news over their FY 2015 results

11 (12) Chase: Assets of Kshs 143 billion ($1.4 billion), and a pre-tax loss of Kshs 1.1 billion ($10.8 million)

12 (11) National: Assets of Kshs 125 billion $1.22 billion) and a pre-tax loss of Kshs 1.68 billion ($16.5 million)

$1 = Kshs 102

 

Relief for Imperial Bank Depositors

Finally a breakthrough for depositors has been reached at Imperial Bank after 1.5 months of anguish:

  •  Kenya Commercial Bank and Diamond Trust Bank will pay depositors of Imperial Bank  their deposits, up to Kshs 1 million ($,9800) each. This means that 44,300 or 89% of the banks’ depositors will get their money within a few weeks at branches of KCB or DTB.
  • This comes as Imperial Bank shareholders have not accepted the government proposal that will allow reopening of the bank.
  • The support of the (DTB’s largest shareholder) Aga Khan Fund for Economic Development (AKFED) has been instrumental in reaching this agreement.

Diamond Trust: Fourth Rights

Diamond Trust Bank is back for a fourth rights issues in recent years from its 11,136 shareholders at a rate of (Kshs 165) $1.95 per share, with each of shareholder entitled to buy 1 share for every 10 held. This follows others done in 2006, 2007 2012  and now this one.
Contrasting the four issues 
Year – Nov-06 ; Nov-07 ;  Jul-12 : Jul-14
Target (Kshs M) – 735 ; 1,600 ; 1,809 : 3,631
New shares (M) – 15.5 ; 23.3 ; 24.4 : 22.0
Price (Kshs)  – 50 ; 70 ; 74 ; 165
Ratio    1:8 ; 1;6 ; 1;8 : 1:10
Budget (Kshs M) 41.6 ;  54.7 ; 57.6: 100.1
  • The IFC remains as a principal funder and shareholder for the bank.
  • Diversification has paid off with the bank having 30% of assets and 19% of profits from outside Kenya. While 77% of Diamond Trust’s $61 million after-tax profit is from Kenya, the Tanzania and Uganda operations contributed about $7 million each of profit with Burundi trailing at ~$150,000 
  • They have extended traditional banking services in the mobile and card age by having M-Pesa at all their ATM machines. They also issues prepaid cards  for NationHela, NakumattGlobal and MiCard and handle remittances/money transfer for WesternUnion, MoneyGram and XpressMoney
  • Others institutions that may need to have rights issues or raise capital this year include ABC, Commercial Bank of Africa, Consolidated and Equatorial banks. 

Improving NationHela

Despite the ease of use, and convenience of Nation Hela as an online prepaid card and as a travel card, there are few challenges that need to be tweaked to improve the user experience for National Hela users.

Card Top Up 
The only reliable way of topping up the card is by physically going to a Diamond Trust Bank branch. Agents of the bank don’t handle NationHela top-up’s and surprisingly, Safaricom’s M-Pesa – which would be the ideal way for millions of Kenyans to load a card – does not work all the time. It’s a hit or miss experience, with many phone calls having to be made to Hela at Diamond Trust to trace the date/time/amount of the M-Pesa transfer – only for that to be reversed. 

Account Management
For now you can request for an abbreviated statement by SMS, as well as get an SMS each time you transact with the card in Kenya.  

There’s also the NationHela site, where a user should be able to view a history of transactions, and do other functions like block a stolen card. But access to the site remains a challenge – at first it looked like another bank site that only works on Internet Explorer browser and a Microsoft Windows PC combination, but no matter the device tablet, mac, or PC laptop, access to the site is a challenge – with password characters not visible, password changes not reflected, pop-up’s (that are auto-blocked on many browsers due to spam) etc. 
Easy of top-up and viewing transaction history are two essential user experience challenge points that need to be addressed, for the card to get wide acceptance.