Nairobi — The government on Monday announced the start of the process for the privatisation of Consolidated Bank of Kenya.

This brings to two, the number of banks that the government has commenced plans to privatise. The other is National Bank of Kenya.

While making the announcement at Treasury Building, Nairobi, Finance minister Uhuru Kenyatta said the process should be expedited.

"I urge the privatisation commission to move with speed to ensure that the benefits expected from privatising Consolidated Bank, that is strengthening our banking sector and mobilisation of resources to support its growth, is not delayed any further."

He said the government felt confident to pull out of the bank after it returned to profitability.

Consolidated Bank realised profit in 2006 after years of losses, registering Sh15 million, then Sh35 million in 2007 and Sh97 million in 2008.

Mr Kenyatta said the privatisation commission will advice on how the shares are to be sold, either through an initial public offering or to a strategic partner.

He did not, however, say the stake to be sold nor the amount that the government is expected to fetch from the planned sale.

The government owns shares in the bank through public institutions that had placed their deposits in failed institutions, which were amalgamated in 1991 to form Consolidated bank.

The Deposit Protection Fund holds 50.2 per cent of the 99.1 per cent of shares held by 24 public institutions.

Others are National Social Security Fund (NSSF) 11.2 per cent, Kenya National Assurance Corporation 9.7 per cent, Kenya Pipeline Company 3.6 per cent and the Kenya National Examination Council 3.5 per cent among others.

Co-operative Bank of Kenya, which has 0.7 per cent shares and Kenya Freight Consolidators with 0.2 are, the only non-public institutions with a stake in the bank.

"These institutions have been seeking an exit mechanism from the ownership of the bank to allow them to focus on their core mandate," said Mr Kenyatta.

He said the commission was in the process of implementing the transaction and will consult widely with stakeholders.

However, it will seek approval from the Cabinet on the options considered appropriate.

According the Capital Markets Authority (CMA), the minimum shares that a firm can offer through an IPO are capped at 25 per cent.

The government expects to raise Sh6 billion from privatisation during the financial year that starts on Wednesday.