NAIROBI, Kenya, Jun 29 – The process to privatise Consolidated Bank is now underway after the government gave the Privatisation Commission the go-ahead to carry out the preparatory work on the divestiture.
Finance Minister Uhuru Kenyatta said on Monday that the Commission would be expected to work out the modalities of how the transaction will be implemented as well as how much stake would be sold.
“We are expecting them, in the shortest time possible, to be able to come to us (Cabinet) with the proposal that they think is best that will include the percentage that will be put up for sale. As a result of that, we will then determine what we as the government expect to realise from this privatisation,” he said.
The Minister told a press briefing that the government intends to have the transaction of the bank which returned to profitability three years ago, completed before the end of this financial year.
“The reason why the government felt confident to pull out of Consolidated Bank is because it’s Board and management have done a commendable job in turning it to profitability,” the Minister explained.
The bank recovered from its loss-making streak in 2006 when it reported a profit of Sh15 million and Sh35 million in 2007. Last year, the 11-branch bank which has an asset base of Sh3.5 billion posted a profit of Sh97 million.
Government ownership in the bank is largely held through various public institutions such as Deposit Protection Fund, the NSSF, Kenya Pipeline Company and the Kenya National Assurance Corporation.
These institutions, which have since been looking to exit from the bank, had their initial deposits converted into shareholding and then integrated to form Consolidate bank.
Mr Kenyatta expressed optimism that the market is ready for the transaction despite the down turn at the stock market.
“We have been seeing an increase in activity in the bourse and we expect this to continue. We did approve the privatisation program in December 2008 and we do expect to realise the full potential of the various entities that we intend to privatise,” he added in reference to the program which also covers National Bank of Kenya and the Kenya Wine Agencies.
Consolidated Bank Chairperson Eunice Kagane said the privatisation would give the bank the much needed impetus it requires to grow as it continues to target the Small and Medium Enterprise sector.
“We welcome this move because it is going to give us the capital we need to do business and exploit our potential,” she enthused while pointing to their successful turnaround plan.