Family Bank shareholders have allowed the Tier II lender to form a non-operating holding company to oversee its regional expansion activities.
The unit is expected to hold shares in Family Bank Kenya and other non-banking subsidiaries.
According to the Central Bank of Kenya (CBK), non-operating holding company activities are limited to holding investments in subsidiaries, holding properties used by group members, raising funds to invest in, or providing support to subsidiaries.
At the same time, a non-holding company can raise funds to conduct its own limited activities, invest funds on behalf of the group, conduct the banking activities required on its own limited functions, and provide administrative, risk management, and financial services to support the efficient operation of the group.
The nod by shareholders last week is expected to clear the way for the lender’s regional expansion dream.
“Regional expansion remains a focus for the bank in supporting our business growth and expansion strategy. We are exploring the possibility of expanding our footprint to countries within the East, West, and Central African region,” said Family Bank Chief Executive Nancy Njau.
“This non-operating holding company will allow for capital efficiency, risk management, and establishment of separate governance structures for both banking and our non-banking subsidiaries” the CEO added.
Currently, the Family Bank Group comprises Family Bank Limited and Family Bank Bancassurance Intermediary Limited (FBBI).
The group has also established the Family Group Foundation which oversees environmental and social responsibility initiatives.
After the shareholder approval and regulatory approvals, including by the CBK, shares held in Family Bank Limited and shares held by the bank in subsidiaries will be transferred to the non-operating holding firm.
Family Bank Group is expected to fund its expansion initiatives through proceeds of a rights issue which had targeted to mop up Sh9.3 billion by offering 643.5 million shares at Sh14.5 each.
The rights issue closed on January 31, 2024, raising Sh252 million to miss the initial target.
The bank is, however, pursuing a second phase of the rights issue targeted at institutional investors to hit its capitalisation target for the venture.
“As resolved during the special annual general meeting, the board of directors is currently pursuing the second phase which is a private placement to institutional investors. We are optimistic that at the back of the continued positive performance, the capital raise will be successful,” the bank notes in its latest annual report.
Family Bank's largest shareholders at present include the Kenya Tea Development Agency Holding Limited, the Estate of the late Rachael Njeri, and Daykio Plantations Limited.
The lender terms itself the fourth largest bank in the country by presence with 95 branches across 32 counties with over 750,000 customers, 4,900 bank agents, and over 8,000 merchants.
As of the quarter ended March 2024, Family Bank had an asset base of Sh145.9 billion which comprised a Sh87.4 billion loan book.
The lender’s customer deposits meanwhile stood at Sh110.4 billion.
Family Bank is well capitalised with a core capital of Sh14 billion and a 43 percent liquidity ratio.
