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Kenya: Barclays Bank Rules Out Another Share Issue
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Business Daily (Nairobi)
11 May 2008
Posted to the web 12 May 2008
Geoffrey Irungu
Nairobi
Barclays Bank has ruled out floating more shares in Kenya through a second primary issue.
The call for Barclays Plc to cede more shares to the public was raised during the bank's annual general meeting last Friday and has featured in previous demands made by shareholders of the Kenyan subsidiary.
UK's Barclays Plc holds 68.5 per cent of the Kenyan unit and can, under a revised law raise its holding to 75 per cent without having to delist from the Nairobi Stock Exchange.
BBK managing director Adan Mohamed said Barclays Plc's controlling interest was beneficial to the unit.
"The bigger the shareholding the bigger the commitment the bank has here," said Mr Mohamed in response to a question from a shareholder.
According to a report from the BBC, the Barclays Plc now makes 40 per cent of its profits outside the UK, with the bank's foreign subsidiaries being a significant part of its money-minting machine.
But all was not rosy for the Barclays Plc in 2007 as it was forced to borrow twice in August through the emergency window offered by the Bank of England as banks came to terms with the sub-prime mortgage crisis in the developed world.
The BBC report further quoted the bank's top management saying that their strategy is to generate 50 per cent of its profits abroad in future, which is a far cry from some years ago when it made less than 20 per cent of its profits abroad. HSBC generates more than 80 per cent of its profits from overseas.
RBS makes over 40 per cent of its profits from overseas and plans to move in a similar direction. Thus UK top banks appear to be a move to expand in areas where there are large unbanked populations. Barclays Plc can only be expected to expand its existing shareholding overseas rather than reduce it. Issues of costs at BBK arose at the AGM as well but the management said they were incurred because the bank has been on an expansion drive.
In Kenya, the bank more than doubled the size of its staff increasing it to 6900 in 2007 compared to 2100 in 2006, a development that enabled it to increase the size of the loan book.
The bank almost doubled the number of its branches as it tried to reach the unbanked public and as it underwent a change of the model from an exclusively high street institution to a veritable mix of high and low end products.
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During the AGM, Mr Mohamed and Mr Charles Ongwae, the finance director, were slated for retirement but shareholders agreed to extend their terms. Mr Nick Mbuvi, who was appointed commercial director in 2007, had his directorship extended as he had been appointed after the last AGM of mid last year.
Some shareholders claimed that their shares had been sold by brokers without their consent and wondered how the management of the bank could help them.
Mr Mohamed however, said the matter could only be properly handled by the Nairobi Stock Exchange.
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