28 November 2012

Kenya: Stanchart Urged to Consider Share Split

PLAYERS in the capital markets have urged Standard Chartered Bank to split it share to make it affordable to the retail investors. The bank's shares, trading at around Sh136 make them the most priced banking stock at the Nairobi Securities Exchange effectively discouraging most retail investors.

NSE chief executive Peter Mwangi urged the bank's board to consider a split which would for instance increase the number of the bank's shares and thus divide the share price by two.

In a case where a company undertakes a two for one share split, this means that a new share of stock is issued for each share in existence prior to the split. After the split, each share is worth half of what it was worth earlier.

Mwangi said a split would make the shares more accessible to majority of investors sentiments that were echoed by Standard Bank Investment Bank executive director Job Kihumba who said most investor in the country are concerned about the low number of the bank's shares at the NSE.

The two were speaking at the start of trading of the bank's right issue shares at the NSE. Stanchart raised over Ksh8.3 billion from the sales of 22,082,856 new shares against a target of Sh3.2 billion.

The bank said the proceeds provides additional capital to enable the bank support its strategy as well as ensure that it is in a sound financial position to meet any impending regulatory changes that may include new capital requirements for banks.

NSE vice chairman Bob Karina said the right issue success is an indication that investor confidence is returning at the NSE. "We at the NSE appreciate the use of the public markets by our commercial banks. We would like to urge our banks to take the next step and issue asset backed securities based on the Capital Markets (Asset Backed Securities) Regulation," Karina said.

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