Fina Bank in Sh700m share swap deal

A Fina Bank branch in Nairobi. The financier has invested over one billion shillings in its subsidiaries In the last one year. Photo/FILE  Nation Media Group

By GEORGE NGIGI
 

 

In Summary

• The transactions take Fina Bank’s ownership of the Ugandan lender to 100 per cent and the Rwandan business to 92.04 per cent.

Fina Bank Kenya has increased its shareholding in Rwanda and Uganda subsidiaries in a share swap deal valued at more than Sh700 million.

The transactions take Fina Bank’s ownership of the Ugandan lender to 100 per cent and the Rwandan business to 92.04 per cent.

The Rwanda government holds the remaining 7.96 per cent

.

“The bank increased its shareholding in Fina Bank Rwanda Limited (the subsidiary) from 55.78 per cent to 92.04 per cent through a share exchange transaction with the non-controlling interests in the subsidiary,” reads the bank’s annual report, quoting the value equivalent of the 36.26 per cent acquired in the share swap as Sh706 million.

In Uganda, Fina Kenya’s stake was first diluted in a Sh550 million (Uganda shillings 16.5 billion) rights issue to 5.91 per cent from 30 per cent, before effecting a share swap with the other shareholders leading to it being 100 per cent owned by the Kenyan lender.

“The shareholders want to have a consolidated structure where Kenya is like the holding company,” said Fina Bank’s head of finance, Alex Mbuthia.

He added that the transactions did not involve cash payments.

Fina Bank, which is classified as a small bank by CBK based on its asset size, has seven branches in Uganda and 15 in Rwanda.

In the first three months of the year the group, with an asset base of Sh28.9 billion, reported a 126 per cent growth in net profits to Sh161.9 million.

Unlike other banks which heavily rely on their Kenyan subsidiaries in profits, Fina Bank’s subsidiaries surpassed the Kenyan unit which contributed Sh69 million compared to the regional operation’s Sh92.9 million.

In the last one year the bank has invested over one billion shillings in its subsidiaries.

Fina Bank is in the process of raising additional capital to fund its growth plans.

The bank has also changed its top management appointing Rajesh Kapoor to replace managing director Bhaskar Ghose, who left after being at the helm of the institution since July 2011.

Rajesh Kapoor joined Fina Bank in 2011 as an executive director in business support from State Bank of India where he was a general manager.

Fina Bank joins other lenders such as DTB and NIC Bank, which have been increasing their shareholding in regional operations that are proving to be new drivers of business as the Kenyan market becomes more competitive.

 

DTB Kenya now holds 62.93 per cent in DTB Tanzania up from 55.4 per cent and 56.97 per cent of the Ugandan subsidiary from 54.07 per cent.

READ: DTB raises stake in Tanzania and Uganda units

NIC Bank has also made known of its intention to increase its shareholding in NIC Tanzania from the current 51 per cent through an ongoing rights issue and purchases in the open market. To achieve this, the bank has set aside Sh608 million.

The increased participation of Kenyan banks in the regional market has seen the banking sector regulator seek to increase their accountability to it in fear that weaknesses in the subsidiaries may easily affect the parent company.

Eleven Kenyan banks have regional presence operating 282 branches and employing 4,780 workers. The subsidiaries contributed Sh5.1 billion in 2012 up from Sh2.3 billion the previous year.

READ: Regional expansion lifts bank profits