Companies

KCB, Barclays chiefs buy shares in their banks

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The chief executives of Barclays Bank of Kenya and KCB Group have finally bought their banks’ shares in a demonstration of confidence of companies they lead. Photos/File

The chief executives of Barclays Bank of Kenya and KCB Group have finally bought their banks’ shares in a demonstration of their confidence in the companies they lead.

The annual reports of the two banks show that Adan Mohamed, the managing director of Barclays Bank of Kenya, and KCB’s chief executive Martin Oduor-Otieno bought shares last year.

The Harvard trained Mr Mohamed has been in the board of Barclays Bank of Kenya since 1999 while Mr Oduor-Otieno has been the CEO of KCB Group since 2007.

Mr Mohamed bought 296,000 currently worth Sh4 million while Mr Oduor-Otieno acquired 509,180 shares now valued at Sh12 million — making them top shareholders among the lenders’ directors and executives. The two have also entered the investor registry when local high net worth and foreign investors are increasingly looking at directors’ share dealing to gauge the outlook of the firms.

Though the two CEOs’ shareholding pales in comparison with the shares that the CEOs of Cooperative and Equity hold in their banks, analysts regard the insider buys as symbolic.

“Few people are better placed to evaluate a company’s prospects than those who actually run it, which is why many investors regard directors’ share dealings as a key indicator of future prospects,” said an analysts at Kestrel Capital who sought anonymity. “The CEOs of KCB and Barclays Bank were more keen to demonstrate this fact through their share purchases”.

Equity’s chief executive James Mwangi owns 127.7 million shares or 3.45 per cent of the bank, while his counterpart at Cooperative Bank, Gideon Muriuki, holds 50.1 million shares or 1.43 per cent of the company.

It’s not clear whether Mr Oduor-Otieno bought the shares through the open market at Nairobi Securities Exchange (NSE) or via KCB’s Employee Share Option Scheme (ESOP) through which staff acquired shares worth Sh18. 4 million at Sh18.62 a piece, according to the bank’s 2011 annual report. KCB’s shares stood at Sh23.75 at the close of trading on Friday.

Mr Mohamed is believed to have bought the shares through the Nairobi bourse since the bank does not have an ESOP and its executives only participated in the share option scheme managed by its parent company, Barclays Plc, which owns 68.5 per cent of the Kenyan unit.

His purchase of the shares comes in a year when Mr Mohamed had expressed his intention to quit the bank after he applied for the position of commissioner-general of the Kenya Revenue Authority (KRA). The head of the country’s tax agency Michael Waweru was retiring.

READ: Barclays Bank boss causes stir in race to pick the new taxman

The agency’s top post went to John Njiraini. Barclays Bank of Kenya said after the appointment that Mr Mohamed would remain as chief executive officer, adding that he applied for the taxman’s job following internal consultations with the board and Barclays Plc.

Barclays Bank used to be Kenya’s most profitable bank, but it lost its position to Equity Bank and KCB last year and now Standard Chartered Bank overtook it in profitability in the three months to March this year.

Barclays Bank of Kenya on Wednesday announced a 28.1 per cent increase in net profit to Sh1.96 billion on higher interest income while Stanchart on Thursday said its net profit in the same period increased 41 per cent to Sh2.3 billion on a faster growth of its loan book.

Most profitable lender

KCB’s net profit rose 36.7 per cent to Sh2.4 billion in quarter one while Equity’s increased 13.3 per cent to Sh2.6 billion, making it Kenya’s most profitable lender and highlighting the importance of regional operations that Stanchart and Barclays lack.

With Mr Mwangi, Mr Muriuki, Mr Mohamed and Mr Oduor-Otieno owning a piece of their banks, the spotlight now turns to Richard Etemesi, CEO of Standard Chartered. The bank does not disclose the directors who own shares in its annual report.

“One director holds 2,438 shares of the company and the other directors do not hold any shares of the company,” said the bank in its 2011 annual report.

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