Companies

Nigerian bank reveals extra pay to Moi allies

bank

A customer being served at a Transnational Bank branch on City Hall Way in Nairobi earlier. It has since been taken over by Nigeria’s Access Bank. FILE PHOTO | NMG

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Summary

  • Access Bank acquired a 99.98 percent stake of Access Bank on July 20 and paid Sh1.21 billion in cash at the time of closing the deal.
  • Top owners of the 36-year-old Kenyan bank with 28 branches were companies owned by close associates of the late Moi, including Joshua Kulei, Simeon Nyachae and the former Vice-President George Saitoti.
  • Access Bank says the entire deal was supposed to cost Sh1.62 billion (5.63 billion) but it received a discount of 4.24 percent.

Close associates of former president Daniel Moi are set for an additional Sh370.85 million (₦1.29 billion) payout for selling a majority stake in Transnational Bank to Nigeria’s Access Bank.

The Nigerian lender has revealed in regulatory filings in Lagos that the extra amount will be paid over the next two years, pushing total payout for the deal to Sh1.58 billion (₦5.52 billion).

Access Bank acquired a 99.98 percent stake of Transnational Bank on July 20 and paid Sh1.21 billion in cash at the time of closing the deal.

Top owners of the 36-year-old Kenyan bank with 28 branches were companies owned by close associates of the late Moi, including Joshua Kulei, Simeon Nyachae and the former Vice-President George Saitoti.

The closure of the deal now paves the way for Access Bank, owned by business mogul Herbert Wigwe, to inject additional capital in Transnational, which had 0.25 percent stake in December 2018, as it seeks a return to profitability.

Access Bank says the entire deal was supposed to cost Sh1.62 billion (₦5.63 billion) but it received a discount of 4.24 percent.

“Transnational Bank’s shareholders received a total cash consideration offer Sh1.62 billion (₦5.63 billion) comprising of a cash consideration payment of Sh1.22 billion (₦4.23 billion) (and) a deferred payment of Sh410 million (₦1.408 billion) to be made to shareholders at the expiration of two years,” says the Nigerian lender.

“For the purpose of the bargain purchase computation, this deferred consideration has been carried at its present value of Sh370 million (₦1.29 billion) using a discount rate of 4.24 percent.”

Sovereign Trust, a company associated with Mr Kulei, a former aide of the ex-President, held 23.03 per cent shareholding in Transnational.

Simbi Investors, linked with Mr Nyachae, a former Cabinet minister during Mr Moi’s administration, held 8.2 million shares or 4.11 percent of the bank.

Losupuk Ltd, associated with the late Saitoti, holds 2.79 per cent. The bank’s chairman has been Henry Kiptiony Kiplangat, who is also the vice-chancellor of Kabarak University, an institution owned by the Moi family.

Andre DeSimone, formerly CEO of Kestrel Capital, was also a director at Transnational but retired in December 2018.

Kestrel Capital is linked to the late Nicholas Biwott, who was a powerful minister in the Moi administration.

Other major shareholders are listed as Archers and Wilcock Ltd with a 23.75 percent stake, and Kenyerere Ltd — associated with Jared Kangwana — with a 2.15 per cent stake.

Mr Kangwana last year got approval to raise his stake in Maisha Microfinance Bank beyond 25 percent. He is also associated with Monarch Group, which owns Monarch Insurance and a number of real estate properties.

In total, Transnational had 18 corporate shareholders (51.4 percent) and 17 individual shareholders with a stake of 48.6 percent, all locally based.

Transnational, with assets worth Sh9.7 billion, made a loss of Sh83.9 million in the financial year ended December 2019, from a loss of Sh71.8 million the previous year.

At the end of 2018, it disclosed that it held Sh24.7 million deposits by companies controlled by directors or their families. Deposits by companies related through control by a common shareholder or their families hit Sh1.42 billion.

The small lender started off as Transnational Finance in 1984, a non-bank, deposit-taking institution that also provided hire purchase services and other loans.

It established a separate fully fledged bank called Trans National Bank Ltd in 1985. The two financial firms merged in 1996, and Transnational Finance ceased to exist.

The buyout by Access Bank has deepened the presence of Nigerian banks in Kenya, with United Bank of Africa (UBA) and Guarantee Trust Bank already in the market. The Kenyan banking sector has witnessed increased interest in the last seven years, with mergers and acquisitions happening.

Egypt’s largest private lender Commercial International Bank in April received the central bank’s nod to acquire a controlling stake in Mayfair Bank.

Other banks that have been acquired in the last seven years are Fina Bank, Giro Commercial, Oriental Commercial, Fidelity, Chase Bank, Imperial Bank and National Bank of Kenya. NIC and CBA groups last year merged to form NCBA Group, marking one of the largest deals in the Kenyan banking sector recently.