Consolidated seeks Sh3.5b new investor

Consolidated bank.Photo file
Consolidated bank.Photo file

State-owned Consolidated Bank is seeking for either local or foreign investor to inject in Sh3.5 billion as part of balance sheet re-organisation, perhaps a first step towards privatisation.

The lender is among 26 state-owned corporations approved for sale by the Privatisation Commission to raise funds to support the budget.

In a statement published in a local newspaper yesterday, the bank wants investors to send in their pre-qualification as a first step by January 9, 2019.

"Consolidated Bank Kenya Limited is implementing a balance sheet re-organisation strategy and therefore seeks to identify an investor that can commit to this strategy as approved by our shareholders on November 30, 2018,’’ a notice from the bank read.

"The Sh3.5 billion has been targeted to address various requirements as per our compliance strategy, funding strategy and growth strategy,” Consolidated Bank chief executive Thomas Kiyai said.

Consolidated Bank chairperson Charles Iyaya said that the bank was implementing a balance sheet re-organisation strategy as a precursor to the implementation of a future privatisation strategy.

The bank which was incorporated in 1989 through a takeover of weak banks and non-bank financial institutions has been under financial bane for the past five years.

The lender’s losses for the first quarter widened to Sh138 million from Sh20.6 million in the corresponding quarter last year.

Its core capital had shrunk to less than Sh21 million in March, way below CBK’s requirement of Sh1 billion. This forced National Treasury which had 79 per cent controlling stake to pump in Sh500 million in exchanges of 25 million ordinary shares.

The National Treasury now owns 85.8 percent of the bank, with the rest of the shares held by other government agencies including National Social Security Fund (NSSF), Local Authorities Pension Trust (LapTrust), Local Authorities Provident Fund), (LapFund), Kenya Reinsurance Corporation and Co-operative Bank of Kenya.

This will be the second privatisation attempt at Consolidation Bank after the first in 2009 failed after Nationwide Finance Company Ltd, one of the financial institutions that was pushed into a forced merger blocked the pan on grounds that it had not been fully compensated.

National Bank of Kenya (NBK) and Development Bank of Kenya are other government controlled lenders earmarked for privatization.

Other state agencies include Kenya Meat Commission, East African Portland Cement, Kengen, Kenya Pipeline Corporation, Kenya Ports Authority, and five sugar millers — Chemilil, Sony, Nzoia, Miwani and Muhoroni.