Kenyan bank lobbies State on share sale

June 18, 2010
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, NAIROBI, Kenya, Jun 18 – The National Bank of Kenya (NBK) has said it will lobby the government to sell its preferential shares to the bank’s existing shareholders once the privatisation process gets underway.

Managing Director Reuben Marambii told reporters on Friday that they had received a request to have the shareholders buy the 5.6 billion preferential shares that are owned by the government and the National Social Security Fund (NSSF).

“These preference shares belong to two shareholders. If other ordinary shareholders want to buy them, they must talk these others into selling. But that is a sentiment that we will communicate to them; that rather than looking for other buyers perhaps they can sell to these ordinary shareholders,” he said.

In the year 2000 when the bank was facing a crunch due to bad loans, the government and the NSSF injected Sh4.5 billion and Sh1.1 billion respectively to bail out the institution and this gave rise to the non-redeemable preferential shares. This arrangement was considered to guard against the dilution of ordinary shares.

The government holds a 22.5 per cent stake in NBK, and a further 48.06 per cent through the state-owned NSSF. The public’s shareholding stands at 29.44 per cent which they hold through the Nairobi Stock Exchange.

Following the bank’s turn around, the government is looking at selling part of its stake in a move that was initially meant to contribute to the Sh8billion its was looking to raise from the privatisation of public assets.
 
Reports that a strategic investor has been sought have been rife with Equity Bank being floated as one of the possible financiers.

Mr Marambii spoke during their 41st Annual General Meeting (AGM) where he announced that the bank would begin paying out dividends next year after a 12-year wait.

Their deficit which as at the end of last year was nearly Sh700 million has been cleared paving the way for the company to issue dividends.

“We are out of the deficit and we must now keep on building on profits meaning that we have to start paying dividend from next year,” he said.

The company which has been on a profitability path for about six years, is also embarking on a Sh700 million expansion program that will see it set up branches across the country and increase the number of Automated Teller Machines.

During the meeting, shareholders approved the amendment to the Articles of Association which will enable the bank to electronically send financial reports and notices to shareholders in a move that will also see it save millions of shillings in printing costs.

This revision will also enable the Board of Directors to communicate via video links when the need arises.

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