NAIROBI, Kenya, Mar 26 – Equity Bank shareholders have approved a proposed share split at the ratio of one to 10. The bank’s Chief Executive Officer Dr James Mwangi said on Thursday that the Board of Directors felt the split was necessary to make it more accessible in the market.
The bank’s share has been trading at the Bourse at an average Sh125 per share.
“When you have a share that is looking overpriced in perception, it undermines its own demand in the market and the only solution is to offer a bonus or split so that you are able to bring the price down proportionately,” Dr Mwangi said.
The move now sets the stage for the bank to seek approval from the Capital Markets Authority for the process to go forward, increasing the bank’s share capital from 400 million to four billion.
Speaking during the bank’s Annual General Meeting, Dr Mwangi said the new shares should start trading at the stock exchange on May 25.
“If we never did all the splits and bonuses we have done (so far) the Equity share would be going for over Sh7,500 at today’s price and at its peak the share would be going at over Sh30,000 which becomes unsustainable,” Dr Mwangi said.
At the same, Dr Mwangi urged shareholders to hold on to the share because its best days are yet to come, citing the return of foreign investors to the NSE.
“The movement we have seen in the last three weeks is foreigners who are coming back to the market.”
Meanwhile Dr Mwangi said the bank is still intent on expanding to both Uganda and Sudan.
“We are fully licensed in Southern Sudan and we expect to begin operation in April. In Uganda we inherited a bank with 30 branches and we expanded with another 20 which will make us the biggest bank by branches in Uganda,” he said.
The Uganda branches, he said, would be launched on March 30 by Governor of the Bank of Uganda.
“Uganda seems to give us better prospects than Kenya. In Kenya there is alot of turbulence but in Uganda they have a perception of us as a very solid bank,” Dr Mwangi said.
He noted that though Sudan is a virgin market it made sense because of the banks clientele from both Kenya and Uganda. He further said they planned to foray into Tanzania and Rwanda after the Uganda and Sudan launch.
“Once we see which of the two expansion processes works well between acquisition like in the Uganda case and start up in the Sudan case we will finally decide which expansion strategy to focus on,” he said.