Nairobi — Co-operative Bank shareholders on Friday approved plans by the bank to list at the stock market through an Initial Public Offering later in the year.

Cooperatives Development minister Joseph Nyaga and Cooperative Bank managing director Gideon Muriuki leave the meeting on Friday. Photo/HEZRON NJOROGE

The IPO seeks to raise Sh5 billion in additional capital and follows an 85 per cent increase in the bank's profit of Sh2.32 billion for the year ended December 31, 2007, up from Sh1.3 billion the previous year.

It also marks a complete turnaround for what was once a loss making institution. Co-operative Bank lost a similar amount (Sh2.3 billion) over the same financial period, seven years ago.

"The IPO will mark a milestone for the bank, founded in 1968, that has gone through a tremendous operational and business restructuring in the last five years under the current management," said the managing director, Gideon Muriuki, while addressing the bank's 400 shareholders. The bank will now turn to the relevant regulatory bodies for statutory approvals and a review of the bank's legal and governance structure of the bank's shares as it seeks to maintain a 65 per cent controlling stake by the co-operative society.

Cooperatives Development minister, Joseph Nyaga, lauded the banks move to raise additional capital from the public since it had overstretched co-operative societies liquidity.

"[The Bank] has for a long time wholly depended on capital injection from the co-operative movement as the shareholders and this may have overstretched the societies liquidity," he said.

"I appreciate that you have ensured the ownership and management of the bank will still remain in the hands of the co-operative movement, even as you start trading at the NSE," he said.

The minister praised the bank's decision to write off debts owed by dormant co-operative societies to the tune of Sh2.85 billion. This, he said, would speed up the revival of affected societies.

The bank's customer base has grown by 66 per cent from 450,000 in the year 2006 to 750,000 in 2007.

It also plans to grow its branch network, presently standing at 43, with additional 20 automated teller machines (ATMs) earmarked during the 2008 financial year.