Rotich allows saccos to keep Co-op Bank stake

Treasury secretary Henry Rotich has exempted Co-op Bank #ticker:COOP from ownership limits that would have applied to its top shareholder Co-op Holdings Co-operative Society, an investment vehicle for savings and credit societies (saccos).

Co-op Holdings, which has a 64.56 percent stake in the lender, is among the classes of investors that would normally be barred from holding more than 25 percent ownership in a bank.

This means Co-op Holdings will not be subjected to the relevant sections of the Banking Act for three years after the investment vehicle decided to become a long-term shareholder in the Nairobi Securities Exchange-listed firm.

Only fellow banks, the government, foreign States, State corporations, foreign banks and non-operating holding companies regulated by the Central Bank of Kenya are allowed to exceed the 25 percent ownership threshold.

Mr Rotich also exempted Co-op Bank from disclosing the full particulars of the ultimate beneficial owners of Co-op Holdings. The investment vehicle is owned by more than 3,000 saccos which in turn have millions of members.

Co-op Holdings was first due to reduce its stake in 2013 following the expiry of its five-year lock-up period since the bank’s listing through an initial public offering in 2008.

Rather than cut its ownership at the time, the investment vehicle sought an exemption which has been renewed once more by Mr Rotich. Co-op Holdings’ move to retain its ownership in Co-op Bank is seen as an expression of its confidence about the lender’s future prospects.

“Considering the excellent performance … Co-op Holdings has resolved not to dilute its shareholding in the foreseeable future,” the society said in 2013.