Stanbic Holdings is set to pay its South
Africa-based parent company Standard Bank Group franchise fees of
Sh733.9 million, a 14.7 percent increase from the previous payment of
Sh639.7 million.
The amounts due have been disclosed by
the Nairobi Securities Exchange-listed lender in its latest annual
report for the year ended December.
Stanbic did not
give further details on the payouts but such fees, rare among the local
listed banks, are typically paid to the franchise owner for business
support, use of its brand or access to its marketing muscle.
The
multinational, for instance, packages products and lending
opportunities across multiple markets for its subsidiaries. It also
supplies Stanbic with a CEO for free.
“In line with
Standard Bank Group’s transfer pricing policy, Greg Brackenridge’s
function is a group oversight role and therefore the majority
shareholder, Standard Bank of South Africa Limited, bears all his
employment costs and benefits,” Stanbic says in the report.
“Those costs and benefits are not recharged to Stanbic Holdings Plc.”
The
franchise fees are among a series of income streams that saw Standard
Bank earn a total of Sh3.7 billion from its local banking subsidiary in
the year ended December.
This represented a 58 percent
jump from Sh2.3 billion the year before. The multinational charged
Stanbic “other operating costs” running into Sh861.3 million, rising
11.1 times from Sh77.4 million.
It billed the local subsidiary information technology fees of Sh199.4 million, a 279.5 percent jump from Sh52.5 million.
Standard
Bank is also set to earn total dividends of Sh1.9 billion from the
local unit in which holds an estimated 69.1 percent stake. The dividend
will rise from the Sh1.5 billion paid on the results for the year ended
December 2018.
The multinational is buying more shares
in the local subsidiary to raise its stake to 75 percent by December.
Standard Bank intends to have Stanbic Holdings retain its listing on the
NSE.
If Standard Bank gets all the new shares it is
seeking, it will have spent more than Sh5 billion in the stake-building
transactions that started in 2018.
The multinational’s move to increase its stake was seen as an expression of its confidence about the subsidiary’s prospects.
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