Co-op Bank chief raises stake in lender

Co-operative Bank chief executive Gideon Muriuki is now the single largest investor in the lender. Photo/FILE/EMMA NZIOKA  Nation Media Group

By VICTOR JUMA

Posted  Friday, September 13   2013 at  12:46

In Summary

• Regulatory filings show that Mr Muriuki bought 10.3 million shares in the seven months to July at an average price of Sh15. His stake is now valued at Sh1.4 billion.

Co-operative Bank CEO Gideon Muriuki has invested Sh155 million to increase his stake in the lender to an all-time high as other directors sold part of their shares amid a price rally.

Regulatory filings show that Mr Muriuki bought 10.3 million shares in the seven months to July at an average price of Sh15.

This has raised his stake in Co-op Bank from 1.85 per cent in December to 2.09 per cent, the highest level since the lender’s listing in 2008 when the CEO’s ownership stood at 1.95 per cent.

His stake is now valued at Sh1.4 billion.

Mr Muriuki — the single largest investor in Co-op Bank — told the Business Daily that the move is an affirmation of his confidence in the lender’s prospects.

“I bought a few shares (in the bank). Of course it shows my confidence in the business,” Mr Muriuki said, declining to comment further.

The bank’s directors, Julius Sitienei and Macloud Malonza, sold shares worth Sh3 million and Sh16.5 million respectively in the same period.

The sell-offs by the two have, however, had a little impact on their stake, which has stood at 0.1 per cent since listing.

The transactions come at a time when the bank’s share price has jumped 40 per cent over the past one year to trade at Sh16, providing an opportunity for the investors to make profit from capital gains.

Mr Muriuki’s share purchase mirrors the confidence expressed earlier this year by the bank’s major shareholder Co-op Holdings Co-operative Society that resolved not to sell its shares despite the expiry of its lock-in period.

The investment vehicle, which owns 65 per cent of Co-op Bank, says its decision is based on the lender’s strong performance, which it expects to be maintained in the coming years.

The society, made up of a group of 3,800 individual co-operatives, was barred from selling its shares in the bank until this year following Co-op Bank’s listing at the NSE in 2008.

“Considering the excellent performance of the bank ... Co-op Holdings Co-operative Society has resolved not to dilute its shareholding in the bank in the foreseeable future,” the society said in a statement.

The institutional investor received Sh1.3 billion in dividends in the year ended December when it announced a dividend payout of Sh0.5 per share.

While Co-op Holdings has relied purely on dividends and bonus share issues, Mr Muriuki has in the past earned millions of shillings from selling part of his shares in the bank.