, NAIROBI, Kenya, Aug 13 – Consolidated Bank has announced the listing and commencement of trading of a Sh1.7 billion bond on the Fixed Income Market segment of the Nairobi Securities Exchange (NSE).
This was the first tranche of the bank’s Sh4 billion Corporate Bond which was launched in July that raised Sh1.7 billion out of an intended Sh2 billion.
Speaking at the listing ceremony, Consolidated Bank Chairman Eunice Kagane said they were pleased that direct retail participation represented about 20 percent of the offer application and confirmed that the bank will use the funds from the issue to grow its business.
“The funds invested in the bank from this issue will be channelled towards small and medium enterprises, with the purpose of financing longer term facilities to expand customer businesses,” she said.
“The funding will be directed to businesses in various sectors which include: project financing, real estate, hospitality industry and education among others,” she added.
Investment Secretary Esther Koimett said they are currently implementing a number of reforms to enhance efficiency in the banking sector.
“The government will continue to deepen structural reforms aimed at promoting access, efficiency and stability in the financial sector,” she announced.
“We are currently implementing the National Payment System Law, while agency banking is expanding exponentially. We’re also fast tracking implementation of financial sector reforms at the regional level to expand our financial market and promote financial integration and stability,” she explained.
The Consolidated Bank bond is the first corporate bond issued at the NSE in 2012 and the seven year fixed-rate bond is tradable in denominations of Sh100,000 paying a coupon rate of 13.25 percent per annum.
The State owned bank has planned to raise more than Sh5.5 billion from the local market to boost its capital base through the announcement of its Sh4 billion corporate bond in addition to approaching the Treasury – the main shareholder through the Deposit Protection Fund – for Sh1 billion additional capital in which they were awarded Sh500 million.
The bank is also targeting to raise Sh500 million from local financiers to support an aggressive expansion programme that also includes agency banking, which is in addition to the Sh800 million advanced to the institution by the European Investment Bank in February.
The bank wants to raise its low capital ratios for headroom it can use to grow the loan book and deposits that stood at Sh9.2 billion and Sh12 billion respectively at the end of last year to Sh18 billion by 2014.
Consolidated Bank has expanded its operations across the country and is now present in towns like Eldoret, Nakuru and Kitengela and is in the process of rolling out its agency banking network.
“These efforts are commendable as they support the objective in increasing access to financial services for the under banked and unbanked population in the country,” Koimett noted.
She said that within the Medium Term Plan 2008-2012, they have listed six priority sectors which include financial services.
“Under financial services in Vision 2030, we have identified a specific need to deepen the Capital Markets through; bond market reforms, demutualisation, review of the Capital Markets Act and the provision of the Capital Markets Authority with adequate legal protection to develop new products and services,” she explained.
Apart from the Treasury, other key shareholders in the bank include the National Social Security Fund, the Kenya National Assurance, the Kenya Pipeline and the Kenya National Examination Council among other government institutions.