Standard Bank gets additional time purchase Stanbic shares

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Standard Bank has been permitted more time to purchase an extra 14.8 million shares with a current market value of Sh1.2 billion in its Kenyan subsidiary Stanbic Holdings.

The South African multinational began amassing additional shares in the Nairobi Securities Exchange-listed firm in July 2018 and had increased its stake in the lender to 71.16 percent as of November last year.

Standard Bank has been purchasing shares in the open market through its investment vehicle Stanbic Africa Holdings Limited (SAHL).

The firm plans to expand its holding to 75 percent and has obtained a regulatory exemption from molding a full takeover offer to Stanbic Holdings’ minority investors.

“SAHL is pleased to announce that the Authority has granted a further extension of the exemption to trade on market for a period expiring on December 31, 2021,” the multinational said in a notice.

“SAHL’s shareholding will increase to its target shareholding of just under 75 percent of the issued ordinary shares in Stanbic Holdings.”

The up-to-date stage of purchases comes after Stanbic’s share price has decreased by about 27 percent from Sh114 in January 2020 to the current level of Sh83.

The share price plunge was a consequence of the Covid-19 pandemic.

Banks took a hit from the pandemic as they recorded increased loan defaults while increasing the provisions for expected spout in bad debt.

As of December 2020, the banking industry had reconstructed Sh1.63 trillion worth of loans, this represents 54.2 percent of the Sh3 trillion loan book.

The loan reconstructing included principal deferment, repayment period lengthening, and interest rate reduction in a few cases.

The move to expand Standard Bank’s stake in Stanbic expresses its confidence in the long-term prospects of Stanbic Bank.

Standard Bank plans to have Stanbic retain its listing on the NSE. Stanbic Bank made a 2.5 billion net profit in the half-year ended June 2020, constituting a 37 percent decrease compared to Sh4 billion a year earlier.

The financial performance is attributed to lower interest and non-interest income and increased bad debts written-off.

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About Author

Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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