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The East African : Jan 7th 2017
BUSINESS, MARKETS AND FINANCIAL ANALYSIS THE MARKET WHISPERER 44 EQUITY MARKETS (WEEKLY CHANGE IN BENCHMARK INDEX) NSE 20 Share Index Kenya 3139.21 -1.48% DSE All Share Index Tanzania 2,144.63 -2.45% JANUARY 7-13,2017 theeastafrican.co.ke @The_EastAfrican USE All Share Index Uganda 1,502.33 1.69% RSE All Share Index Rwanda 127.26 0.00% JSE All Share Index South Africa 51,168.40 1.02% NGSE All Share Index 26,264.97 Nigeria -2.27% July ’16 Dec ‘16 July ’16 Dec ‘16 July ’16 Dec ‘16 July ’16 Dec ‘16 July ’16 Dec ‘16 July ’16 Dec ‘16 IN BRIEF money from Africa’s capital markets The African Development Bank board has approved the institution’s borrowing programme for 2017, worth $8.4 billion, which it will raise from capital markets in African countries through local currency bonds to finance development projects. Director of treasury at AfDB Hassatou N’Sele said that the African currency issuance is linked to local currency needs to fund projects in local currency. “We have issued bonds in the past in the domestic markets of South Africa, Uganda and Nigeria, which have been listed in those markets. Currently, we have a wide array of capital markets across the globe, with the bulk of bonds issued in dollars, euros, and the South African rand,” Ms N’Sele said. World Bank acquires stake in Britam The World Bank’s International Finance Corporation is set to acquire a $33.16 million or 10.37 per cent stake in the Kenya-headquartered insurer Britam subject to regulatory and shareholder approval. It is believed that IFC was mainly attracted to Britam due to its ability to sustain market share in an increasingly competitive environment – especially with entry of new multinational insurance companies. “The proposed subscription is subject to conditions that are customary to transactions of this nature, including receipt of shareholders’ approval and regulatory approvals,” Britam said in a statement. Kenya signs Competition (Amendment) Bill 2016 into law Kenya’s President Uhuru Kenyatta has assented to the Competition (Amendment) Bill 2016 that will now enhance consumer protection from unfair and misleading market conduct. This will now see the fines for anti-competitive conduct imposed by the Competition Authority of Kenya increased drastically. The agency may now impose a financial penalty of up to 10 per cent of the preceding year’s annual gross turnover. The new regulations also introduce criminal liability of parties in a merger who provide materially incorrect or misleading information; or fail to comply with any condition attached to the approval for the merger, with fines of up to $100,000 or imprisonment for a term not exceeding five years now enforceable. African Development Bank to raise Mau≥itian g≥oup to buy Fidelity Bank T he Fidelity Commercial Bank has received approval from its board of directors to sell the lender to Mauritian financial services group SBM Holdings, paving the way for a share purchase agreement (SPA) to be signed in the near future, and for the remaining regulatory approvals to be made. In a statement, Kenya’s Central Bank announced the development, which will be the first acquisition of a Kenyan lender post the interest rate-cap regime. Already, the local banking outlook looks dim in the wake of reduced interest income, which has impacted book valuations. “Following SBM Group’s preparedness for the conclusion of the transaction at the earliest, with the necessary capital infusion, Fidelity held a board meeting on December 21, 2016 and then an extraordinary general meeting of shareholders on December 28, 2016 where the transaction was discussed and approved,” said CBK in a statement. Under the deal with SBM, which is listed on the Mauritian investor appeal following the capping of interest rates that had made banking a volumedriven business, which required players to effectively manage overheads and funding costs, and to have a stable funding base in order to minimise balance sheet refinancing risk. “It will be increasingly difficult A woman walks past Fidelity Bank on Kaunda Street in Nairobi.The board of directors has okayed its sell to SBM Holdings. Picture: File bourse, the latter is expected to inject Ksh1 billion ($10 million) in additional capital into Fidelity Bank once the acquisition is complete, subject to regulatory approvals from both Mauritius and Kenya. Fidelity Bank had a market share of 0.39 per cent as at the end of 2015 and operates 14 branches in the country. SBM, on the other hand, is the second largest firm listed on the Stock Exchange of Mauritius with an asset base estimated at $4.2 billion as at September 30 last year. Its banking arm, SBM Bank (Mauritius) Ltd, is one of the leading banks in Mauritius with an international footprint in India, Madagascar, and a representative office in Myanmar. In October last year, analysts said that Kenyan banks had lost Kenya Ai≥ways in hunt fo≥ new chief executive KENYA’S NATIONAL carrier, Kenya Airways, has contracted an international head hunting firm to hire a new chief executive even as the national carrier gears up for what will be a critical year in its turnaround plan. The airline’s board chairman, Michael Joseph, said that the firm has already kicked off the search for a suitable candidate globally with the aim of having a new CEO in place by April when Mbuvi Ngunze, the current chief executive officer, will be leaving. “We’re using an international headhunter who has been engaged by KQ and Vodafone before. They have already started the search. What we are looking for is a turnaround specialist, somebody who will improve the company’s performance. We want an airline executive who has experience in the sector. That is why the person we pick is likely to be an expatriate,” Mr Joseph said. The airline, which is 29.8 per cent owned by the Kenyan government and 26.7 per cent owned by Air France- KLM, has posted four consecutive full-year losses beginning March 2013. In the year to March 2016, it recorded a net loss of $248.19 million. Published at Nation Centre, Kimathi Street, and Printed at Mombasa Road, Nairobi by Nation Media Group, Box 49010, GPO Nairobi, 00100. Registered at the GPO as a newspaper. Nairobi Office, Tel: 3288000, 211448, 337710, Fax 214531, 213936. Dar es Salaam Office. Tel: 2119657/8. Kampala Office, Tel: 232771, 232772. Fax 232781 Download free QR Readers from the web and scan this QR (Quick Response) code with your smart phone for pictures, videos and more stories to sell a bank at a premium over its book value because valuations have dipped. Smaller interest margins and the plummeting returns on shareholders’ equity have also put off investors,” analysts at Sterling Investment Bank said. Francis Mwangi, head of research at Standard Investment Bank, said listed banks’ return on equity is very low and while that in itself is enough to dampen demand, sellers also have to adjust their selling price to reflect the current realities on the ground. “It is difficult for banks to justify the selling price of 2.5 to three times their book value in the current environment of interest rate capping,” said Mr Mwangi.
Dec 31st 2016
Jan 14th 2017