Bank holding Sh141m in Kenya IPO refunds

March 12, 2010
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, NAIROBI, Kenya, Mar 12- Citibank Kenya says it is still holding Sh141.6 million in unclaimed refund cheques from the Safaricom Initial Public Offer (IPO) held in 2008.

This comes as a forensic audit from the Auditor General’s office showed the lead receiving bank for the IPO had not completed reconciliations with other relevant stakeholders in the IPO, and as a result it was not possible to establish the amount of proceeds yet to be remitted to the Treasury.

Citibank Chief Executive Ade Ayeyemi said on Friday that reconciliation with all selling agents was concluded with discharge certificates signed by all but one agent as of February 2009.

Mr Ayeyemi said out of the 852,000 refund cheques issued in 2008 only 5,757 were yet to be cleared.

“As of now that is the amount of money (Sh141,619,985) Citibank is holding on the instruction of the Capital Markets Authority,” Mr Ayeyemi said.

A directive issued by the Central Bank of Kenya and the Capital Markets Authority (CMA) dated June 12, 2008 forbids commercial banks from accepting endorsed refund cheques forcing Citibank to continue holding the money.

Mr Ayeyemi said they were in negotiations with CMA to get a deadline for the cheques to be collected and cashed.

“We hope they will come to the conclusion as soon as possible,” he said adding it was costly for the bank to hold on to the funds as they could not invest them.

In the past week the Kenya Association of Stockbrokers and Investment Banks has made fresh demands for a new forensic audit on the Safaricom IPO, a position Mr Ayeyemi welcomes.

“We will present the facts to make sure both the auditor general and ourselves come to the same conclusion. The report is the starting point and we will provide the facts to make sure it is clarified,” he said.

In 2008 the government sold 10 billion shares from its 25 percent shareholding in Safaricom which created a buzz among investors given the success of the telecom giant.

As such, the IPO was oversubscribed by 532 percent.

According to Mr Ayeyemi the bank was opposed to the share allotment structure instead proposing the issuing of shares in accordance with the shares being floated as was the case with Mumias.

“We didn’t set out to have refunds but in this instance a lot of people were interested in this transaction,” he said.

Citibank together with the National Bank of Kenya, Equity Bank and Post Bank formed the Citibank Consortium as the placement banks for the IPO.

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