A National Bank branch in Nyeri town. PHOTO | FILE
By EDWIN MUTAI, emutai@ke.nationmedia.com
In Summary
- The NSSF is the majority shareholder of NBK controlling 48.1 per cent shares, the general public 29.4 per cent and the Treasury 22.5 per cent.
- The NBK intended to raise about Sh13 billion by issuing 630 million shares at Sh21.5 each. The bank was to raise the money for expansion, to boost its capital base and trans.
- “The cabinet on April 15 directed a stop on privatisation until due diligence is conducted on risks and benefits. There is a team of consultants appointed to look into this matter,” he told temporary PIC chairman Cornelly Serem.
Differences between the NSSF, the Treasury and the Privatisation Commission have stalled plans for the Sh13.5 billion National Bank of Kenya (NBK)'s rights issue.
The head of economic planning at the Treasury Geoffrey Mwau
yesterday told MPs that the NBK majority shareholder, the National
Social Security Fund (NSSF), the Treasury and the Privatisation
Commission have hit a deadlock regarding the structure of the share
sale.
The Treasury intends to convert its preference
shares into ordinary shares, but has differed with the NSSF on the rate
of conversion of the stock.
“That is the crux of the matter. There has not been
any agreement. That is why the process stalled,” Dr Mwau told the
Public Investments Committee (PIC).
The NSSF is the majority shareholder of NBK
controlling 48.1 per cent shares, the general public 29.4 per cent and
the Treasury 22.5 per cent.
The Capital Markets Authority acting CEO Paul
Muthuara told the MPs that the CMA received an application on April 13,
2014 from Faida Investment Bank on behalf of NBK (issuer) for approval
of a right issue.
The NBK intended to raise about Sh13 billion by
issuing 630 million shares at Sh21.5 each. The bank was to raise the
money for expansion, to boost its capital base and transform it into a
top-tier bank.
Also read: NBK shelves expansion to preserve capital
While the NSSF wrote to the CMA undertaking to
participate in the rights issue and underwrite any untaken rights by
existing shareholders upon completion of the share sale, the Treasury
has to date not indicated whether it will uptake its rights, hence
stalling the NBK share sale.
Mr Mwau, who also sits on the CMA board, explained
that the delay was further occasioned by a cabinet decision to stop the
privatisation process which had been started by the commission.
He told MPs that the Privatisation Commission had undertaken significant work in privatising the NBK.
Risks and benefits
“The cabinet on April 15 directed a stop on privatisation until due diligence is conducted on risks and benefits. There is a team of consultants appointed to look into this matter,” he told temporary PIC chairman Cornelly Serem.
“The cabinet on April 15 directed a stop on privatisation until due diligence is conducted on risks and benefits. There is a team of consultants appointed to look into this matter,” he told temporary PIC chairman Cornelly Serem.
He said the floating of additional shares to the
public by NBK was further complicated by the ongoing reforms in State
corporations.
“Since 2014, we have been undertaking parastatal
reforms where some will be merged and others will remain. There was a
proposal to merge three banks-Development, Consolidated and NBK where
the government holds majority shares. From that standpoint, it was
agreed that the privatisation process be put on hold ,” Dr Mwau said. He said the Privatisation Commission was in the process of procuring a consultant to merge the banks
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