Bank sale to raise Sh5 billion

The privatisation of Consolidated Bank has kicked off with the appointment of PricewaterhouseCoopers as transaction advisers.

The bank’s chief executive officer David Wachira said the government sought to raise Sh5 billion by selling a portion of the bank to the public.

He said the money would help finance expansion to Kisumu, Nakuru and Eldoret towns, which were growing fast.

“We asked for privatisation because we would like Kenyans to directly own this business,” Mr Wachira said during the launch of automated teller machines at Kimathi University in Nyeri.

The bank’s management has been working with the Privatisation Commission on how to execute the sale, he said.

Due diligence will start in April, while the sale would be in the next two years.

The bank, wholly-owned by the government, has 12 branches, mainly in Eastern, Central, Nairobi and Coast regions.

Mr Wachira said Consolidated Bank had strong business in the small and medium enterprises category under which the bulk of local businesses fall.

“The bank has a risk-based pricing on its loans, which determines whether the lending rate is above or below 13 per cent,” he said.

The bank is among the 23 State-owned companies lined up for privatisation, including the National Bank of Kenya and Kenya Wine Agencies Ltd as well as five sugar factories and 11 hotels.

The process has been sluggish, but Privatisation Commission’s Solomon Kitungu has reiterated that the sale of State corporations would go on as soon as approvals are received from government.

Details on the proposals on how the process would proceed were submitted to the Treasury late last year.

“We are on course with the plans,” said Mr Kitungu, “it is only that there is a lot of work to be done to ensure transparency and accountability. We do not want to rush it since we would not be creating any value for Kenyans.”

As opposed to previous budget, the 2009/2010 fiscal year does not rely heavily from privatisation proceeds.

Mr Kitungu said the commission was putting final touches to the remaining companies set for privatisation before presenting details to the Treasury.