CFC on hold?
Could the ongoing political crisis be giving Standard Bank of South Africa second thoughts about its approved merger with CFC? A decision by the Reserve Bank in SA to conclude the deal is also overdue.
Dangers of insular banking
Our banking history is littered with the remains of Daima Bank and other indigenous African and Asian banks. Most went down due to malpractices by directors and managers, but also in-lending to close circle or community companies who as a group could be potentially exposed to a singular risk.
The banks also engaged in subtle discriminatory practices like charging outsiders higher rates, frustrating their loan applications or facilities, or making them feel unwelcome - which ultimately proved to be counter productive as locking them out increased the risks that the banks faced by increasing their exposure and dependence on a core group or sector.
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5 items tagged "Stanbic"
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7:54
Kutwa Tuesday: Banking Brief's (Jan 15)
» bankelele -
CFC-Stanbic Bank EGM: merger approved
» bankelele An extraordinary general meeting to approve the CFC – Stanbic merger was held on November 12 at the Intercontinental Hotel
Deal: Stanbic is the largest bank in Africa with a presence in 18 Africa countries and 21 others around the world (including Bank of America in Argentina which they just bought). It has asset of $140 billion and 43,000 employees – and by combining their (relatively) small Kenyan operation with CFC, they will become the 4th largest bank in Kenya.
Approval got: CMA, CBK, monopolies commission
Approval to be got: shareholders, SA reserve bank, NSE
Deal should be complete in about a month
The meeting was led by CFC Chairman Charles Njonjo. Fellow director J. Kierini introduced the board and, other dignitaries present who including D. Ndonye (Deloitte), Jimnah Mbaru, Kaplan & Stratton advisers, and Craig Bond and a team from Stanbic include his son who works at Stanbic Kenya.
CFC MD Soundararajan explained rationale for the merger - synergies, very similar and complementary customers, regional opportunities, and enhanced capital adequacy. Customers will get a one stop shop for all their business, staff get to work in a bigger bank with more careers opportunities (and all employees are assured of retaining their jobs).
Shareholder questions
Dilution of minority shareholding? : Management said they are getting into a bigger entity
Are major shareholders bailing? : Gambit will get paid in new shares but also about 5.8 billion shillings. MD answered that shareholders are staying and the company is not going anywhere
Mgmt. afraid to say that CFC being ; Management says it’s a merger, as it is not a sale, new entity will have 40% CFC and 60% Stanbic shareholders
if CFC is growing well, why sell? Need for capital is important. MD said that he needs about $100 million, while new entity will have around $60 – 70 million. Merger will enhance the company’s growth plans
Due diligence on Stanbic? ; Done and they shared strategies which each other to see if they were on the same path. Also board member (and lawyer) Fred Ojiambo denied that a 25 billion shilling lawsuit had eroded the value of Stanbic (K) saying that claim had no firm base
Why no bonus shares instead of selling out?: MD said CFC had in the past given the largest bonus divided in the history of NSE 21 for 1 and the board will consider that at the right time
This is it: The historic moment passed in a flash as the Chairman proposed that all six resolutions be passed in a single vote since they were all interdependent.
The resolutions passed in a single vote;
- Created 117 million new shares to accommodate Stanbic
- Empowered the directors to allot shares to Stanbic
- Changed the name of the company to CFC Stanbic Holdings
- Transferred the bank business (assets, liabilities, employees, creditors etc.) to Stanbic
- Amended the new articles of association
- Changed the business of the company from a bank to holding company
Now CFC Stanbic holding co to remain listed on the NSE while CFC Stanbic Bank will be a 100% owned subsidiary
Other speakers
Craig Bond: The Head of Stanbic Africa, said they got lucky in Kenya as the first bank they identified turned out to be the right partner offering great synergies; in Nigeria they have looked at 6 banks which have not panned out. He said that Stanbic which intends to be the ‘best emerging markets bank’ in the world had identified 3 countries that they intended to dominate in Africa – SA, Nigeria and Kenya where they intend to break into the top 2 (not remain #4), by rapidly expand branches in 2008
Commenting on the largest bank in the world ICBC buying 20% of Stanbic (it’s 70% owned by government of china) - he said China is coming to Africa in a big way for her resources, and it offered Stanbic cheap money with the promise to match them $ for $ in any investment in Africa
NSE Chairman Jimnah Mbaru said he was proud that the deal happened under his watch and confirmed that he expected NSE to approve the deal by end of the week. He looked forward to having a big institution with the capital to enable economy to meet growth goals in terms of resources. And finally called out to family owned companies to see what could happen if they transform themselves into institutions as the late Mr. Jani had done with his firm which was now merging with Stanbic.
There were further tributes to the late Mr. Jani who created the company in 1951 with a vision for into to partner with an international power house, MD Soundararajan and directors Njonjo and Kierieni for making the deal happen
Humorous moment: Chairman Charles Njonjo was sad that there were only ‘5’ shareholders present when the meeting started, but got happy as the numbers had reached about 100 by the time it ended. However it didn’t really matter as he had 45% proxies from Africa Liaison and Gambit while fellow director Kierieni had 30%.
Goodies: souvenir pen, umbrella, big lunch box with little food from intercontinental – (fanta, cake, apple, and bit of goat, chicken and sausage)
other news
Barclays launched tranche one of its bond - 1 billion shillings, maturing in November 2014.
Rwanda and Burundi to join the East Africa Development Bank once they subscribed via share capital
Equity Bank extends banking hours to almost match office hours; 8 a.m. – 4:30 p.m. on weekdays and 8 a.m. – Noon on Saturday
The National Housing Corporation is offering investors loans to build rural and peri-urban homes. The maximum loan amount is only 1.5 million shillings – and it’s advanced at 13% over up to 10 years
Sasanet investors want to notify partners, bankers, and other companies (including safaricom) that the company had not refunded investors their funds.
Urban transport gets more expensive as all the major transporters Citi hoppa, KBS and matatu owners start a blanket 10 shilling per ride fare hike to counter rising fuel prices
opportunities
Celtel territory sales executives (17). D/l is 16/11
IT manager at EA Cables. apply thru deloitte esd@deloitte.co.ke
Jamii telecommunications: account managers (3). d/l is 16/11
KBR various jobs in Iraq, Afghanistan pr Kuwait. But …
Madison: finance manager, senior investments manager
Microsoft: public sector lead account manager - public sector & education solution sales professional (business productivity), infrastructure consultant, MBA graduate
Head of ICT services - Standard Group. d/l is 13/11
Chief operating officer at Renaissance capital. apply to coo@rencap.com by 19/11 -
Tax Collection is Unprofitable
» bankelele KRA shocker
The Kenya Revenue Authority, the organization which has re-written our donor relationship, championed responsibility/awareness of tax paying among citizens, spurred parastatals to start paying dividends back to the government (instead of draining it) and enable the fixing of the economy – is not profitable!
Year end results (June 2006) show the tax collector with income of 4.8 billion and expenditure of 6.0 billion – meaning a deficit of 1.2 billion and that compares to 2005 when they just about broke even 5.1 billion of income and expenditure. They also don’t have the title deed to their headquarters – Times Tower worth 2.5 billion that is still in the name of Central bank (for whom the tower was built)
Stanbic CFC merger approved
The Finance Minister has approved the merger between Stanbic and CFC paving the creation of the country’s 4th largest bank (see bank rankings and an earlier comparison of the parties)
The combined, but yet to be named, bank will have assets of over 55 billion shillings ($800 million), deposits of 43 billion, loans of 30 billion and a pre tax profit as June 2007 of 934 million ($14 million)
Capital markets authority (CMA) approval should be a formality, as they have already been assured that the new bank will remain listed on the NSE.
MP behaving badly
A high flying MP has grabbed i.e. taken over and fenced the parking lot of a popular Nairobi Sports Pub which he frequents the place – even as he is trying to extract an exorbitant rent from the pub for use of the yard. -
Bank Sold
» bankelele Name this bank?
The deal of the year brings together Stanbic and CFC Banks merge together and is expected to be finalized next month with only Central bank and CMA approval left.
The combined, but yet to be named, bank will have assets of over 55 billion shillings ($800 million), deposits of 43 billion, loans of 30 billion and a pre tax profit as June 2007 of 934 million ($14 million)
Mzalendo bank account
Commenting on the report on bank charges released this week, The Governor of the Central Bank called for a Mzalendo bank account which would probably be akin to mzansi from South Africa which is a low cost account at several banks (with wide branch networks – e.g. KCB, Equity, Postbank) that has similar features and charges at all the banks
banking is not cheap
A recent report released on the banking sector shoed that banking not cheap is not cheap for most account holders .
This should not be a surprise to the public who read about the bank profits or the authorities who are sent all charges and tariffs by the banks each month
There’s already been grumbling from research firms ho say a local firm could have carried out the survey and some banks who say the report is inaccurate.
Earlier, some advertised banking is unexpectedly not as cheap -
CFC Stanbic Bank
» bankelele CFC Stanbic Bank is the official name of the proposed new entity created by the merger of the CFC and Stanbic banks' pending approval from among others shareholders, Capital Markets Authority, Central Bank of Kenya (Minister of Finance).
The merger makes sense in that the 9th and 10th largest banks (both around $350m in assets) can merge to become the 4th largest bank in the country (after Barclays, KCB, Stanchart)
Sticking points are that the deal is structured to include the creation of new shares (113 million) that will be transferred to Stanbic in addition to buying a majority of Gambit shares (currently the largest shareholder in CFC). Gambit will still remain as the 4th largest shareholder in the bank after the merger.
To sweeten the deal, CFC Stanbic Bank will remain listed on the NSE and Stanbic Kenya will be a wholly owned subsidiary. Also the statement points out their branch networks complement each other, so perhaps only Mombasa (where they, and most banks, have branches on Nkurmah street) and branches in Uchumi stores may need a work out.
When the story first broke last year (despite having a caution), it sent CFC's share price up 10X (to about 900 shillings) and this notice also advises shareholders to exercise caution in dealing their CFC shares until further announcements are made. The announcement was released on Friday (but not yet up on NSE site), and published in the newspapers on Saturday to perhaps dampen the speculative mood/euphoria and allow careful analysis to set in before Monday.
(I Don’t have CFC shares but they have been very good stockbrokers to me. Unrelated to this is, I have Stanbic Uganda shares)
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