Kenya will put up for sale one of its two remaining State-owned banks. This is after the Cabinet approved the privatisation of the Development Bank of Kenya (DBK).
The Cabinet Secretary for the National Treasury is now expected to gazette the privatisation programme, setting the stage for another acquisition in the banking sector.
Besides, DBK where the State has a 89.3 percent stake, the other State-owned lender is Consolidated Bank of Kenya, where the State has 50.2 percent shareholding.
The Cabinet noted that DBK, which had for long relied on State guarantee while operating as a development finance institution (DFI), was ready to stand on its own as a deposit-taking commercial bank.
“As part of the Administration’s plan to steer the turnaround of our State corporations and other State-owned enterprises...Cabinet considered and approved the proposed privatisation of the Development Bank of Kenya (DBK),” read the Cabinet dispatch.
The government said the decision was informed by the fact that DBK had transitioned into a fully-fledged deposit-taking commercial bank regulated by the Central Bank of Kenya.
In the last three decades, the government has been divesting from banks with Consolidated Bank also in the pipeline of entities to be privatised.
Depending on the financial health of the institution, the government may decide list the lender on the Nairobi Securities Exchange (NSE) or look for a strategic investor.
A loss-making entity cannot be listed on the NSE.
In the fiscal year to June 30, 2023, DBK made a net profit of Sh48.99 million, an increase from Sh28.4 million in the same period in the previous year.
DBK’s total assets by the end of June last year were Sh17.9 billion from Sh16.9 billion in the previous period.
The size of the loan book was Sh9.6 billion, from Shh8.7 billion in the previous year.
By the end of June 2023, the bank had a total liability of Sh14 billion, an increase from Sh13 billion in the same period in 2022.
The Cabinet also announced that it had approved the privatisation of seven hotels, including Kisumu’s Sunset Hotel, Golf Hotel, Mount Elgon Lodge and Kabarnet Hotel. Also, to be sold are Mombasa Beach, Ngulia and Voi safari lodges, which are under the Kenya Safari Lodges and Hotels Limited.
