Monday, November 05, 2007

Bank Wars

Equity vs. Barclays
Equity Bank is often cited as being what caused banks, especially Barclays Bank to change their focus. But is it true, or is Barclays expanding all over Africa not just Kenya, in terms of opening new branches and expanding into the retail sector.

political muscle: A recent editorial strongly defended Equity and it has also received strong defense from Government ministers whenever allegations have been thrown against the bank.

Equity has also not been shy in employing political muscle themselves. The delayed conversion of rival building society into Family Bank has been linked to Equity's influence and the bank was also instrumental suffocating pyramid schemes who grew to rival banks for deposits while ironically relying on banks for their massive fund transfers to/from investors.

Equity in 2008: Even if 2008 brings in a new government, Equity Bank should be ok. While the current government has been kind to Equity, giving it the space and access to market, environment to expand, Equity has been smart to use their access to Government to grow, without necessarily going to bed with the government. I.e. targeting government and parastatal deposits and banking business. Equity has expanded nationwide and has customers throughout the country and a positive image as a mwananchi bank. Think Kenol, not Mugoya for Equity next year, if the election follows the current polls

other banking briefs

Barclays bond: Barclays Kenya will issue a $75 million bond over 7 years.
Seem receptive, though their last bond to finance a mortgage business was scuttled by former finance minister who asked that the bank invest new money into Kenya, not borrow from the local market. That should whet the appetite for corporate investors who may be put off by the anticipated over-subscription (wasted funds, lost opportunity, delayed refunds) of a Safaricom IPO

But is Barclays parent in trouble? The global financial crisis has also taken done in the Citi (bank) CEO

Merger slows It's a shame that the CFC-Stanbic merger can be jeopardized by a frivolous lawsuit frivolous lawsuit. How does a 50 million shilling dispute balloon into a 25 billion shilling lawsuit for damages?

City Finance is expected to be taken over by new owners. Kenya's smallest bank should get a boost from new owners - as it is the only loss making bank so far this year. As at June this year, it had assets of just 510 million shillings ($7.7 million) in assets, deposits of of 131m, and loans 218m.

Collapsed banks update: Capital Finance and Pioneer Building Society are to be wound up while customers of Daima Bank will be paid another dividend

Bad loan relief?: The interest rates advisory centre offers loan and mortgage interest recalculation, financial cost assurance (overdraft, loan interest), in-duplum interest recalculation for the period (1/1/2001 to 31/7/2005) and informs its clients that that all bank charges from 1/11/89 may be illegal!

Though IRAC won against Housing Finance, bad debt relief may be a pipe dream for most, except for a few instances

Other corporate news

Keroche going into beer production after huge bill handed to them of unpaid taxes. This is the last thing that Kenya Breweries wanted to hear

The Minister for Finance has approve the takeover of Kobil Petroleum by sister company Kenya Oil Company Limited (Kenol). But Kobil is/was a Delaware corporation?

Fake sugar: Strange saga of a ship which arrived at Mombasa with contraband sugar already packaged in Mumias sugar bags – ready to go to store shelves. Packing sugar in their 'produced in Kenya' branded bags has been a key branding initiative by Mumias to differentiate it from imported sugar and seems to have worked, but counterfeiters can only be kept at bay for so long

Wananchi TV: convergence as Kenya's largest ISP wananchi is going into partnership with GTV to begin high speed cable and satellite TV all in one package.

Also mobile TV on phones : a few months ago, the bosses of Kenya Broadcasting Corporation were on TV from a golf tournaments talking about their plans for the rest of the year which included launching a new radio station and also coming up with the first news broadcast via mobile phones by September. (Read on - KBC is a shareholder in the local multichoice Kenya)

Opportunities

- A new Equity Fund in Kenya urgently looking for a financial systems engineer with banking experience. Apply to ndeman2@yahoo.com

- Apprentice to Africa. The Apprentice Challenge comes to Africa – with $200,000 in prize money

11 comments:

acolyte said...

Fao! Just like the good old days!
It does seem that the demise of equity bank was greatly exaggerated, I may just consider opening an account with them so I can save my hard earned dollars.
As for Keroche, I do think it was time that KBL were knocked off their pedestal!

bgm said...

Any ideas who'll be Trump in Aprentice Africa?

bgm said...

shucks, just realized they updated the site :) . It'll be a Mr. Biodun Shobanjo

Anonymous said...

Barcalys africa is under absa and that explains their change of strategy allover Africa.

aegeus said...

Equity has had lots of bad publicity but it seems to have hurt them not they seem to be growing stronger by the day.

Then Keroche have clawed their way from nothing to a force to be reckoned with, are London Distillers a part of KBL?

just what? said...

why would an honest company such as Kenol Register in Delaware?

The Barclays bond seems to have run into a thorn bush at the nse. mr.Mbaru indirectly accused them of frustrating the very same bond market they are trying to use right now.

Keroche has a long way to go before knocking off any one from any pedestal.Making and selling qaulity beer at affordable prices (about $18 per 100Liters) is not as simple as it may seem.

Dropmyload said...

Banks are reluctant to trade in the bond market for one fundamental reason: all bond trades have to go thru a broker!

This is ridiculuos, since banks trade in bonds valued at 10X or even 100X the share capital of some of these mickey-mouse brokers, and for banks this is a settlement risk. We have all heard of brokers not delivering bonds or countervalue after deals are struck.

If the NSE had any sense, they would allow banks to trade interbank, like the money and forex markets, that way the bond market would be totally liquid and active!

Like I said before, NSE and Mbaru are a block to progress, we should de-mutualise the NSE and make it a public entity.

bankelele said...

acolyte: The Budget this year messed up Keroche's pricing.

bgm: It's probably going to be on DSTV only. But that has not stopped people from watching Big Brother en masse

aegeus: More will come until they
sort out some managment & governance issues

just what? Kobil is the Delaware corp, not KENOL
- Corp bonds have lost flavour to syndicated loans (Telkom, Celtel, Safaricom)

Dropmyload: good point, bond trading is something corporate treasurers should be able to do on their own

just what? said...

Banks:
the nse announced they'll have listed a REIT by april next year. just what is in it for retail investors? are REITs better than stocks & bonds?

Anonymous said...

REIT are normally specific provisions of the law that confer certain task benefits based on the underlying investment.. so if kenya does not have thoe provisions is it right to call them REITS. or just property companies.

R said...

I've done a little investigation with sources that shall remain unnamed and to an extent, you're right, Barclays new approach has more to do a new global way of being/doing things than it has to do with Equity growth.

But, you've got to admit, Equity has given Barclays a bit of a run for their money in this particular market. They have had to sit up and take notice. And that's been good for me the customer, of course.

Time will tell which strategy works best: theirs in broadening their scope, or Standard Chartered's in deciding they did indeed serve a niche market and they would stay where they were at and serve that market best they could.

I do think Equity Bank has been good for the entire banking industry because it has drawn customers from a segment of the population who were for the most part not using banking services at all and some of these will no doubt 'graduate' to the other banks.

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