CMA approves bonus issue for National Bank investors

The Capital Markets Authority has approved a bonus issue for the National Bank of Kenya in a move expected to sooth investors who have gone for more than a decade without dividend.

Investors will get two shares for every five held resulting in the introduction of 80 million additional shares that will push the bank’s listed stocks to 360 million.

“In approving the bonus issue and listing of the additional shares, the authority has considered the application by National Bank of Kenya and is satisfied that it meets the requirements of the Capital Markets Act 485 (A) and Regulations issued there under,” said CMA chief executive Stella Kilonzo in a statement on Tuesday.

Despite the bank posting Sh1.462 in net earnings for the year 2009, and Sh330 million for the first quarter of this year, management had sought the approval of shareholders to retain the earnings earlier in the year.

Bank MD Reuben Marambii said the bank lagged behind its peers and has to play catch up because it did not have funds for expansion.

Accumulated losses

While NBK was struggling to overcome accumulated losses, the rest of the banking industry continued to innovate, redefining the banking ball game.

“We plan to open about 80 branches but it all depends on how much we can do this year. Already, the other banks are way ahead of us... we would like to catch up,” said Mr Marambii.

With the retained earnings, the bank can now embark on an expansion strategy.

It has been on a steady recovery path that saw it return to profitability seven years ago, but accumulated losses prevented the bank from paying dividend in the past 12 years.