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KCB Receives Shareholder Approval for NBK Acquisition

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KCB Group, Kenya’s biggest lender by assets, on Thursday received approval from shareholders for its proposed acquisition of National Bank of Kenya in a 10-for-1 share swap transaction.

While the deal still requires the support of NBK’s shareholders and regulatory approval, it was passed unanimously at KCB’s AGM.

In it, KCB Group will be able to acquire all of NBK’s issued ordinary shares.

The approval follows the takeover offer made by KCB on April 18 for the acquisition of 100 percent of NBK’s shares through a share swap of 10 NBK ordinary shares for one KCB ordinary share.

This acquisition forms part of KCB’s ongoing strategy to delve into opportunities for new growth as they maximize returns from and invest in existing businesses.

“For us, the acquisition is an opportunity to strengthen the deposit base and lending capacity, increase cost efficiencies due to economies of scale and boost transactional revenue through leveraging of technology,” said KCB Group Chairman Andrew Wambari Kairu.

“This is an attractive, commercially viable proposition that provides the scale needed to compete and win in the rapidly evolving world of financial service.”

Shareholders approved the board’s recommendation of a final dividend of Sh2.50 per share during the AGM held in Nairobi. This translates to a total dividend per share of Sh3.50 and a total dividend of Sh10.7 billion for the year. Shareholders on the register are set to receive payment of the dividend on or before July 30 by close of business on April 29, 2019.

“We delivered on our promises for 2018 on the back of a definite lending strategy and an aggressive digital banking proposition,” said Mr. Kairu.

93 percent of the group’s after-tax profit was contributed by Kenya business, representing a 17 percent growth. On the other hand, international businesses collectively rose by 64 percent. The international businesses along with KCB Insurance Agency and KCB Capital are expected to contribute up to 20 percent of the group’s total profit by next year.

“Our focus is to proactively support our customers’ growth, enabling businesses to thrive and economies across the East African region to prosper,” said Joshua Oigara, KCB Group Chief Executive Officer and Managing Director.

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Sh1,000 Notes Abroad to be Exchanged in the Country, CBK Says

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Patrick Njoroge, the Central Bank of Kenya (CBK) Governor, has urged those with the old Sh1,000 notes that are out of the country to exchange them in Kenya before the October 1st deadline elapses.

The Governor dismissed permitting conversion of the old currency outside the country, adding that the CBK had alerted all foreign banks to cease recognition of the old notes.

He further said that banks outside the country will not be receiving any new notes to aid in conversion, contending that this would defeat the process of demonetization.

“If you have the Kenyan currency and you happen to be outside the country, there is only one way to get value for it before October 1. You have to take a trip here and go through the procedures outlined in the Gazette notice and subsequent releases,” said Dr. Njoroge when speaking at a press briefing yesterday.

“You cannot convert it to any other currency out there since this would defeat the process of demonetization.”

Earlier this month, notices were issued from the Bank of Tanzania and the Bank of Uganda discontinuing the conversion of the old currency in their banks. In addition, they have directed their countries’ banks to apply more stringent due diligence processes to all currency flows.

The procedures to be followed for currency conversion by locals will also be followed by those coming into the country.

Dr. Njoroge has warned that measures have been put in place to thwart any efforts to clean illicit money in nations involved in significant financial transactions with Kenya.

After the East African Community allowed free movement of goods and people across member states, the Kenyan shilling is frequently used in business transactions in neighbouring countries.

The result is that this money comes back home through those trade routes and official currency repatriation mechanisms between central banks of countries in the Community.

He also said that the deadline will not be extended, arguing that an extension would create a loophole for those seeking to clean their dirty money to do so.

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Safaricom and Equity in Deal to Offer Loans to Contractors

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Safaricom contractors that may find themselves short on cash will now be able to access as much as Sh200 million in unsecured short-term loans following a deal between the telco and Equity Bank. This will help the contractors to maintain cash flow positions before receiving payment for their services.

The firm wrote a letter addressed to its business partners in which it said that the aim of the deal is the creation of a more procurement-ready business. The main beneficiaries will be Safaricom dealers, suppliers, and agents.

In the fiscal year ended March 2019, Safaricom had 440 dealers, 156,000 M-Pesa agents, and 1,164 suppliers.

“We are pleased to inform you of our partnership with Equity Bank which will offer our partners financing solutions linked to purchase orders and invoices,” said Francis Murabula, Safaricom’s head of supply chain management, in the letter.

He is asking the dealers, suppliers, and agents for consent to share their information including contact details, invoice and purchase order information to enable loan processing for potential firms.

Contractors will be able to borrow from Equity before or after they fulfill their contractual obligations with Safaricom.

The terms and amount of the loan applied for will depend on each company’s credit rating.

Therefore, for a contractor to qualify for an unsecured loan of up to Sh200 million, they have to be using unpaid accounts for goods and services that have already been provided to Safaricom as their collateral.

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Kenya’s Victoria Bank Appointed to Invest Sh1.5bn in Fin-tech Start-ups

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Victoria Commercial Bank (VCB), based in Kenya, has been appointed to oversee the investment of a Dubai-based equity fund’s kitty worth Sh1.5 billion in African and Asian financial technology startups.

This will see 1.7 million customers hailing from several countries including Bangladesh, Kenya, Ghana, Nepal, Tanzania, Sri Lanka, and India benefit from the Nimai Emerging Financial Services Fund (NESF) facility.

“The markets were chosen based on the existing (fintech) presence and experience. It integrates investment expertise with deep operational capability and resources,” said a joint statement.

According to Yogesh Pattni, the VCB chief executive, the deal presents an opportunity for a stronger partnership with Nimai Capital. The latter recently set up a kitty worth Sh1 billion to fund onward lending to enterprises operated by women.

Housing finance, insurance, microfinance, banking, and retail are some of the technology mobility-enabled emerging financial services opportunities that will receive investment from the fund.

Pankaj Mundra, NESF’s co-founder and managing director, expects VCB’s extensive understanding of the Kenyan market and business experience to be of benefit to the fund.

“We look forward to working with Victoria Commercial Bank to source and develop investment opportunities for the Fund across East Africa,” said Mr. Mundra.

The benefits to be enjoyed by investee firms include expert financial advice from line companies, system integration with Indian fintech firms and access to financial services from the diaspora.

“We have a firm belief that the fund will make a significant and positive impact in the lives of millions of families in addition to generating appropriate financial returns for investors,” the statement added.

A proven track record is a condition for start-ups to access funding.

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