Corporate News
By DAVID HERBLING, hdavid@ke.nationmedia.com
In Summary
- The Treasury controls a 22.5 per cent stake in NBK, which implies that the entire rights issue could be valued at about Sh22 billion.
- NBK shareholders last year approved a plan to create an additional 800 million new ordinary shares to be floated in a rights issue that was then expected to raise about Sh10 billion to fund its expansion plans.
The Treasury has budgeted for Sh5 billion to defend its stake in National Bank of Kenya
at a rights issue set for the first quarter of next year, in what
signals a likely doubling of the cash call from the initially announced
amount.
Treasury secretary Henry Rotich has requested the National
Assembly for the cash in a supplementary Budget tabled in Parliament on
Thursday.
The Treasury controls a 22.5 per cent stake in NBK,
which implies that the entire rights issue could be valued at about
Sh22 billion.
National Bank shareholders last year approved a
plan to create an additional 800 million new ordinary shares to be
floated in a rights issue that was then expected to raise about Sh10
billion to fund its expansion plans.
“The funds will help us to maintain our
shareholding as it is. We want to take up our entire rights,” said Mr
Rotich in an interview.
The National Social Security Fund (NSSF) is the
largest shareholder at NBK with 134.5 million shares equivalent to a
48.05 per cent stake. NSSF managing trustee Richard Langat said the
pension fund is ready to take up its rights in the cash call.
Other top owners of the mid-sized lender include Kenya Re
with two million shares equivalent to a 0.71 per cent stake and
billionaire businessman Ephraim Maina who has 0.9 million shares.
This is National Bank’s first rights issue since listing at the Nairobi bourse in 1994.
NBK also plans to use funds raised from the cash
call to redeem the lender’s 1.135 billion preference shares held by the
Treasury and the National Social Security Fund (NSSF) at an approximated
cost of Sh7.09 billion.
The preference shares —which have a par value of
Sh5 a piece—will be cashed at a 25 per cent premium translating to about
Sh6.25 per share.
The mid-tier lender says it will use cash from the
rights issue to enhance its statutory capital requirements, grow its
loan book, revamp its core banking IT platform, open new branches across
Kenya and fund regional expansion.
Delays in rolling out the NBK cash call has seen
the lender nearly contravene Kenya’s regulatory capital and liquidity
requirements.
NBK’s total capital-to-total-risk-weighted-assets
stood at 14.7 per cent as at September, against the 14.5 per cent ratio
set by the Central Bank of Kenya, giving it little headroom to grow its
loan book.
CBK has put in place new prudential requirements
raising the ratio of total capital to total risk-weighted assets by an
extra 2.5 percentage points to 14.5 per cent to cushion banks from
unforeseen shocks.
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