NSSF acting managing trustee Tom Odongo during a past press conference. Mr Odongo said NSSF would be presenting candidates for election at the upcoming annual general meeting. DIANA NGILA
National Social Security Fund (NSSF) is set to open a fresh fight with the government over the control of KCB Group as the fund demands a seat on the banker’s board following the exit of three directors including the chairman.
The bank has announced the expiry of terms of three directors including Peter Muthoka (chairman), Susan Omanga and Sunil Shah in line with its articles of association that provide directorship for a maximum of eight years.
The exits have opened the way for NSSF, which is the second largest shareholder of KCB, to seek representation in a bank that has for years remained in the grip of the government—the largest shareholder.
This is set to spark a fight that will boil over at the bank’s 41st annual general meeting on May 18, where the two top shareholders will flex their muscles. “NSSF will be presenting candidates for election in the upcoming annual general meeting (AGM),” said Tom Odongo, the acting managing trustee of the NSSF in an interview with the Business Daily.
“We are seeking representation on the KCB board because NSSF holds a substantial stake in the bank to take care of our interests.” NSSF has a 7.79 per cent stake while the government has 17.64 per cent and Sunil Shah comes in third with a 2.44 per cent. This means that the top shareholders will have to win the support of the more than 165, 400 shareholders who share the remaining 72.1 per cent stake. But the top shareholders can arrive at a consensus before the AGM and present candidates as a united front.
“In accordance with the board charter, Peter Wanyaga Muthoka, Susan Nkirote Omanga and Sunil Narshi Shah retire from the board having served for the maximum eight years,” the notice read. “Elections will be held in respect of the three vacancies in the board of directors.” The bank’s CEO Martin Oduor-Otieno failed to return our call following a commitment to do so from his office. The exit of three directors marks the first round of the makeover of KCB’s board since three more directors, Prof Peter Kimunyu, Musa Ndeto and Joseph Adongo, of the nine-member are due to retire in the next two years.
Most of these directors were tapped when the government owned nearly a third of the bank, but the State has had a wider role in the affairs of KCB.
The government’s shareholding has dropped from 100 per cent in the 1970’s to 70 per cent in 1990 to 35 per cent in 1998 and 26.2 per cent in 2007.
Cut executive suite
The transition emerges at a moment when the bank is in the middle of a major restructuring plan that saw it cut its executive suite by nearly half, leading to the exit of its deputy CEO’s Sam Kimani (now CEO Jamii Bora Bank) and Peter Munyiri (CEO Family Bank).
Mr Oduor-Otieno has one year left on his contract which is set to expire on May, 11th 2013.
The bank last year emerged as Kenya’s most profitable lender after its net profit grew to Sh10.9 billion from Sh7.1 billion in 2009—toppling Barclays Bank from the top post. This performance earned the government and NSSF Sh968.6 million and Sh416.6 million respectively in dividends.
Last year, it replaced Jennifer Riria, Paul Ngumi and Alfred Juma—all government appointees —with Mohammed Hassan (now chairman), Sylvia Kitonga and Erastus Mwongera.
Other NSSF directors sitting on the bank’s board are Francis Atwoli (Cotu boss) and NSSF managing trustee, Alex Kazongo, giving the fund five of the bank’s eight voting rights.
