[2008-06-24]  State gives up KCB rights
The Government will not take up its Kenya Commercial Bank (KCB) rights due to pressing financial needs.

Finance minister Amos Kimunya said Treasury did not have the money to buy the 58.2m additional shares valued at KSH1.45 billion.

"We want to pass the rights to Kenyans to increase their shareholding in KCB," Kimunya told financial sector stakeholders and investors during the launch of the bank’s KSH5.5 billion rights issue in Nairobi on Monday.

"We don’t have money due to competing needs," he said.

Kimunya said the Government had many responsibilities that require funding, among them the free education programme.

The Government’s sudden change of mind over its ownership at KCB will see its shareholding in the country’s largest bank in terms of branch network, dip to 23.6 percent from 26.23 percent after the conclusion of the issue.

The Treasury is the largest single shareholder in KCB holding a 26.23 percent stake.

Institutional and retail investors hold 21.8 percent and 52 percent respectively.

KCB’s total issued shares stand at two billion.

Kimunya said the Government’s decision would give Kenyans an opportunity to own more of KCB but warned that those taking up the Government’s rights in the bank would have to pay some premium.

"We are not doing it for free but at a cost," said Kimunya.

The minister was addressing a gathering comprising, among others, the Central Bank Governor Prof Njuguna Ndung’u, Nairobi Stock Exchange (NSE) chief executive Mr. Chris Mwebesa, Central Depository Systems Corporation chief executive Ms Rose Mambo, Capital Markets Authority representatives and members of the banking and stock broking fraternity.

He said Kenyans who hold KCB shares should participate in the issue to own more stake in the bank.

Last month, Treasury reduced its 7.3 percent shareholding in Housing Finance to 3.8 percent as it declined to participate in a KSH2.3 billion rights issue.

The KCB is planning to raise KSH5.5 billion by offering 222 new ordinary shares to the existing shareholders at a discounted price of KSH25.

The funds will be used to grow the bank’s business locally, boost the core capital and support regional expansion initiatives.

"One of the defining factors in the quest for more capital is our commitment to observing prudential capital ratios which are now under pressure due to our growth levels," said Mr. Peter Muthoka, the KCB Group chairman.

In the issue, shareholders will be entitled to one share for every nine held.

"I believe that there will be an uptake from the public due to political calmness and demand for shares as witnessed during the Safaricom IPO," said Mr. Martin Oduor-Otieno, the group chief executive officer.


Source: Copyright © 2008 Standard Group