WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2010-04-05 Time: 16:00:02 Posted By: News Poster
By Jaindi Kisero
Nairobi – According to confidential documents seen by The EastAfrican, the Privatisation Commission – the ultimate authority on sale of government assets – has recommended that the National Bank of Kenya be sold through a trade sale.
This is another way of saying that the bank should be sold to an existing investor in the same line of business – another commercial bank as opposed to, say, selling the bank to a wealthy private equity firm or financial company with neither interests nor experience in the banking sector.
With the scope of suitors having been narrowed to commercial banks, the battle to own the 10th largest bank in Kenya in terms of assets is going to be explosive.
Mergers and acquisitions tend to generate controversy, the battle lines usually being drawn between the management of the company and the newcomers, especially where a hostile bidder is involved. NBK’s sale is no different.
Despite the fact that the bank is yet to be officially put on the chopping block, fierce shadow boxing is already going on with some of the potential suitors openly angling for a vantage point to bid for the coveted prize.
Already, the undercurrents have spawned an awkward spat between the Privatisation Commission and Equity Bank – one of the local banks said to be among the front runners in the race for what promises to be the most significant acquisition in the banking sector in recent years.
The evidence of heat started emerging in November last year, when the Commission’s chief executive, Solomon Kitungu, felt constrained to fire off a letter to the CEO of Equity, influential corporate executive James Mwangi, accusing him of making public statements that, he said, were likely to give the impression to the market that Equity Bank had already bagged the deal.
Buyers’ confusion
Mr Kitungu lamented that as a consequence of the confusion created by Mr Mwangi’s utterances, several suitors and potential buyers of NBK had approached the Commission wanting to confirm whether it had entered into private arrangements with Equity on the sale of National Bank.
“You injure the privatisation programme when you indicate that you will buy the bank without due recognition of a bidding process or competition as required under the law,” wrote Mr Kitungu.
The letter was copied to the Nairobi Stock Exchange, the Kenya Bankers Association, the Central Bank of Kenya, the Capital Markets Authority and the National Bank of Kenya.
Apparently, Mr Kitungu’s letter to Equity was in response to complaints by the management of the National Bank of Kenya.
In October, NBK’s company secretary, L.G Kamwete, fired off a strongly worded letter to Mr Mwangi charging that his utterances were prejudicial to NBK’s interests and reputation as a quoted company.
“These utterances place our bank in an unnecessary, unfortunate and invidious position as they do not tally with factual events on the ground,” he said.
He said he had been prompted to write to Mwangi because as a publicly quoted company, the NBK was bound by disclosure requirements to “clarify rumours and reports” that were likely to affect trading in securities.
Mr Kamweti pointed out that banking was about winning the confidence of customers and charged that the premature utterances by Equity’s chief executive prejudiced NBK’s interests in terms of customers’ loyalty.
“You may have customers who would never wish to be associated with National Bank. Likewise we may have customers who would never like to be associated with Equity Bank,” he told Mr Mwangi, adding, “We request you not to make utterances which affect our business undertaking.”
Clearly, the fight to acquire NBK is going to be fierce. It will be a prime target, especially for large commercial banks eager to expand their footprint in the country’s booming banking business.
In the past, a number of suitors had expressed interest in acquiring the bank.
As far back as 2005, Standard Bank of South Africa approached the government with an offer to acquire NSSF’s stake in the bank.
The South Africans said their interest derived from the group’s desire to have a distribution mechanism for their wholesale and retail banking products and services.
South African interest
Whether the South Africans will still be interested this time around remains to be seen, as they have since acquired the CFC Group. CFC, despite having a healthier balance sheet than the NBK, does not have as many branches.
In Kenya, the demand by foreign investors – especially from West Africa and South Africa – for stakes in medium-sized banks and insurance companies of the size of the National Bank of Kenya has been on the rise.
The two most prominent recent acquisitions were the purchase in 2007 of the former East African Building Society by the EcoBank Group of Nigeria and the merger of Stanbic Bank and the CFC Group.
The National Bank of Kenya started operating in 1968 at the height of the agitation for Africanisation of the banking sector.
It was to remain a wholly owned government bank until 1994, when the NSSF acquired a 37.5 per cent stake that was at that time worth Ksh750 million ($10 million at today’s rates).
The government sold another 20 per cent to the public in 1995, reducing its total stake to 42.5 per cent.
A further 20 per cent was then sold, leaving the government with 22.5 per cent by 1996 which it continues to hold to date.
Subsequently, the NSSF acquired additional shares from the Nairobi Stock Exchange, bringing its total stake to 48 per cent. Following a run on the bank in 1998, the government came up with a rescue plan in which billions of shillings were pumped into the ailing institution.
At first, the government deposited Ksh4.5 billion ($60 million) in the bank.
Thereafter, the Ksh4.5 billion and NSSF’s deposits amounting to Ksh1.175 billion ($15.6 million) were converted into shareholder loans.
In 2003, these shareholder loans were converted to preference shares structured with equity features so as to allow the bank to maintain adequate core capital as required by the Central Bank of Kenya.
In 2006, the government pumped in Ksh21 billion ($280 million) through long term bonds into the bank in order to clean its balance sheet of government guaranteed loans.
A due diligence process conducted by audit firm PricewaterHouseCoopers as part of preparations for the bank’s privatisation has shown that the bank is currently adequately capitalised and meets CBK’s prudential guidelines.
Original Source: 
Original date published: 5 April 2010
Source: http://allafrica.com/stories/201004050498.html?viewall=1