[2008-05-29]  Company urges court to block proposed Stanbic-CFC merger
The intended merger between Stanbic and CFC Bank is illegal, a Nairobi court was told. A former customer of the bank, Industrial Plant (EA) Limited urged a Nairobi court to stop the merger because the process contravenes section 13 of the Banking act. The Plant’s advocates Mathew Oseko and Moses Kurgat argued that once an illegality has been raised touching on the merger, then the court ought to deal with it first. The advocates accused Stanbic Bank of moving into the merger process while ignoring the repercussions the same would have on its former clients. They argued that once the merger is in place, then Stanbic’s old license will cease to exist and all its assets would be transferred to the new entity. "Once the merger takes place, the plaintiff would be left to pursue an empty shell for breach of contract," the advocates told Justice Mohammed Warsame. Industrial Plant EA was arguing in a suit in which it is demanding a security deposit of over KSh26 billion before the intended marriage between the two banks. It accused Stanbic Bank of employing delaying tactics so that it evades depositing KSh26 billion as security. The merger process is expected to be completed in two days time. It would bring forth another entity known as CFC Stanbic Holdings. The firm accused the defendant of dragging the Government into the case, so that the court is prohibited from issuing an injunction against the State. Stanbic Bank has filed a separate application seeking a stay of proceedings in the main suit. It stated that if the process is interfered with, the damage would be irreparable. Stanbic says that Industrial Plant was aware of the intended merger since July last year and it is in bad faith for it to seek an injunction of the process when the deal is almost sealed.


Source: Copyright © 2008 Standard Group