Two Equity Bank appointees bow out of Housing Finance board

Corporate News

David Ansell (right) and Shem Migot Adholla, Equity Bank appointees have resigned from the board of Housing Finance. PHOTOS | FILE 

By VICTOR JUMA, vjuma@ke.nationmedia.com

In Summary

• David Ansell and Shem Migot Adholla, who were appointed to the board of HF by Equity, did not offer themselves for re-election at the mortgage firm’s recent annual general meeting.
• The two were not replaced, reducing HF’s board membership to seven directors and further reducing the influence of the major shareholders Britam and the National Social Security Fund.
• This means that HF has now complied with CBK’s prudential guidelines that require at least a third of the board members to be independent directors.

Two Equity Bank appointees have resigned from the board of Housing Finance (HF), a move that has seen the mortgage financier comply with corporate governance guidelines set by the Central Bank of Kenya (CBK).

David Ansell and Shem Migot Adholla, who were appointed to the board of HF by Equity, did not offer themselves for re-election at the mortgage firm’s recent annual general meeting (AGM).

The two were not replaced, reducing HF’s board membership to seven directors and further reducing the influence of the major shareholders Britam and the National Social Security Fund (NSSF).

HF lists them on its website as Frank Ireri (CEO), Benson Wairegi (Britam CEO), Peter Munga (Britam director), Adan Mohamed (NSSF chairman) and independent directors Steve Mainda (chairman), Constance Gakonyo and Gladys Ogallo.

This means that HF has now complied with CBK’s prudential guidelines that require at least a third of the board members to be independent directors.

“It is therefore required that independent directors should constitute not less than a third (1/3) of the total members of the board,” reads part of the CBK prudential guidelines.

The banking regulator defines an independent director as a board member who is not a direct or indirect representative of the principal shareholders, has not worked in the bank as an executive for the past five years and has not had any business relationships with the institution in the same period.

Significant suppliers of the lenders or relatives of senior managers and those with a direct or indirect shareholding of more than five per cent in the appointing banks are also not considered independent.

Mr Munga is also the chairman of Equity but his continued directorship at HF is based on his association with Britam where he is a director and significant shareholder.

He was re-elected at the AGM alongside Mr Mainda and Ms Gakonyo. The exit of Mr Ansell and Prof Adholla came after Equity sold its 24.7 per cent stake in HF to Britam for Sh2.8 billion, booking a Sh1 billion gain from the transaction.

READ: Britam finalises buying Sh2.7bn Equity shares in HF

The divestiture marked a change in strategy by Equity which had previously stated that it bought into HF as part of a wider plan to build a financial services empire that is present in all lending segments, including mortgages.

That plan has, however, recently faced regulatory challenges with new CBK rules requiring banks to loosen their grip on financial institutions that are not their subsidiaries.

The new rules left Equity with the option of taking majority ownership in HF to realise its ambitions that would have included control of the mortgage firm’s board and management or exiting.

HF, which has also faced operational constraints from the new prudential rules, is in the process of transforming into a holding company that can invest more freely in various subsidiaries.