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Kenya: Stanbic-CFC Merger Verdict Next Week
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Business Daily (Nairobi)
14 May 2008
Posted to the web 14 May 2008
Albert Muriuki
The fate of the Sh19 billion Stanbic -CFC merger will be known next week after the closing of submissions in one of the two cases seeking to have Kenya's biggest bank takeover halted.
Lawyers for Stanbic Bank and CFC agreed with the lawyers for 15 employees who have sued for compensation to conclude the hearing of their arguments today. The employees obtained an injunction last week against the merger and a ruling on whether the order should stay or be lifted is due next week.
Justice Roselyn Nambuye said she hoped to be able to give a ruling on the order next week as she would be away tomorrow.
Last week, the high court issued an injunction against the merger until the case filed by the employees is heard and determined.
The case was filled by 15 former employees of Stanbic Bank in 2005 ,before the merger talks had commenced, seeking Sh532.2 million as claims for pension after their retirement.
The amount has now reached Sh1.16 billion due to interest. Justice Nambuye temporarily stopped the merger on May 8. In its objection to the injunction, Stanbic Bank argues that the grounds relied upon by the 15 employees violate company law and the rules of the court.
The merger is also in focus in another suit launched by Industrial Plant (EA), a company in receivership, demanding over Sh25 billion from Stanbic Bank over a credit line terminated by the bank.
Standard had asked for a security of Sh525 million to be deposited with the court by Industrial Plant. Justice Luka Kimaru of the Milimani Commercial Court rejected Stanbic's claim and instead set the security at Sh10 million.
Industrial Plant have since placed the security and is preparing for injunction proceedings against the merger until the case is heard and determined.
Although the parties involved in the two suits have expressed readiness for an out of court settlement, Stanbic Bank has maintained that the suits have minimal chances of success.
"Based on consultation with external legal counsel, it is considered that the suit is frivolous, vexatious, out of time and lacks merit," Stanbic Bank said in its financial report for 2007.The case involving Industrial Plant comes up for hearing on May 19. "We will challenge the intended injunction," said Mr Allen Gichuhi of Walker Kontos and Co Advocates which is representing the bank.
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The former employees who obtained the injunction order argued that the merger between Stanbic and CFC be put on hold until Stanbic deposits Sh1.6 billion in court to safeguard against default or capital flight after the success of the merger as a new body would be formed that would be different from Stanbic Bank.
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