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Equity gears up for major expansion

NAIROBI, June 27- Equity bank Friday announced that it had set aside Sh500 million in this financial year to run its expansion program.

Equity CEO James Mwangi told reporters that the funds would go towards increasing its branch network by a further 15 outlets as well as to extend their Automated Teller Machines (ATMs) from 350 to 500 before the end of 2008.

He also hinted that they were exploring the possibility of venturing in the East and Central African region particularly Rwanda and Southern Sudan in a bid to utilize its huge capital base.

"The bank has been capitalized to the tune of Sh19billion and that enables us to grow rapidly," the CEO enthused.

With such amounts of capital Equity is 10 times more capitalized than any other bank in the Kenyan market.

This followed a capital injection of Sh11 billion by a strategic partner Helios EB in December 2007.

"This is what gives us the strength to expand that rapidly," he added.

Mwangi spoke during the bank’s Annual General Meeting (AGM) and an Extra Ordinary General Meeting (EGM) where shareholders approved the institution’s desire to acquire a 100 percent stake at Uganda Microfinance Limited.

The transaction, which involved a share swap, cost Equity Sh1.7 billion which in turn allotted 8.07 million new ordinary shares of the bank at a price of Sh206 per share.

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Asked why the bank decided to enter Uganda which has very stringent regulations; the CEO said it was better to operate in such a market arguing that "there are no surprises in such markets."

The green-light meant that the bank will now be able to meet its deadline to start operations in Uganda beginning 1st July.

During the meeting, Mwangi did not rule out a share split following the rapid upward movement of the share, which was trading at an average of Sh304 on Friday, giving an indication of an imminent split.

Companies often result to doing a split in order to make a share more affordable and to give it more liquidity.

He told the anxious shareholders that the board would meet and deliberate on the issue.

In 2007, the bank gave a bonus issue of two shares for every share held, a move which increased the dividend payout Sh181 million to nearly Sh600 million.

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