NIC Bank eyes buying out rivals

By James Anyanzwa and Agencies

NIC Bank plans to acquire up to three other local banks in danger of raising core capital requirements, the bank’s chief executive said yesterday.

This is after it posted a rise in half-year profits. “We have to look for a bank which is compatible with good chemistry, shareholding and strategy. Maybe two or three banks,” James Macharia, managing director of NIC Bank, told Reuters on the sidelines of a media event.

Banks will be required to have at least Sh1 billion ($12 million) of core capital from the end of 2012, up from Sh250 million, and many of the smaller institutions are expected to miss that target even though the rule was introduced in 2009.  CBK says the prudential guidelines have been put on halt.

NIC announced a bonus issue to shareholders in a bid to drum up support for its planned Sh2 billion rights issue. The bank says it will dish out one new share for every ten held after the issue, which is priced at Sh21 per share.  NIC bank is planning to offload an additional 98.7 million shares to the existing shareholders in the ratio of one new ordinary share for every four ordinary shares held.

Proceeds of the issue launched yesterday, will be used to finance the local and regional expansion drives.
Macharia said the bank’s accelerated growth over the years coupled with its future plans informed the need for an increase in its capital base.

The Rights Issue will be carried out between August 27, and September 14, 2012.   NIC Bank Group’s pre-tax profit rose to Sh2.3 billion during the six months to June 30 from Sh1.6 billion registered in a similar period last year.