National Bank of Kenya sale to kick off in June

By Luke Anami

The National Bank of Kenya (NBK) will be privatised by June, the Acting Chief Executive of the Privatisation Commission of Kenya Solomon Kitungu has said.

In an exclusive interview with The Standard, Kitungu disclosed the Commission was finalising procurement of consultancy services to assist in preparation of the detailed proposal that is required by the Cabinet.

The privatisation has been on the cards for a decade, but Kitungu insisits it will be a matter of months before the offer hits the market.

"As per our plan, we intend to complete the transaction in the current financial year," he explained.

Last month, NBK Managing Director Reuben Marambii, had hinted that the privatisation of the bank would kick off before the end of this year.

He said the Government would offload 22 per cent of its shareholding to the public.

The bank’s privatisation process, Marambii said, also involves a search for a strategic investor.

Kitungu declined to reveal whether the Commission had reached an agreement with the National Social Security Fund (NSSF), which owns 48 per cent of the bank. "I understand the NSSF board is not functioning at the moment. We will involve them when the consultants are finally engaged for the privatisation process." The beleagued NSSF board had over the years opposed the privatisation of the bank. As at December 2006, the bank had accumulated non-performing loans amounting to more than Sh17 billion, but this amount reduced to Sh3 billion by December last year after the Government absorbed the debt through a bond. He said proceeds from the sale of shares have already been captured in the Budget even as analysts express doubt that the transaction would conclude in time.

Other companies

Kitungu also listed Kenya Wines Agency (Kwal) and Development Bank of Kenya as firms that are also lined up for privatisation.

The funds raised, he said, would help bridge the growing budgetary deficit.

Through privatisation of public enterprises, the Government intends to mobilise resources to rehabilitate, modernise and expand Kenya’s productive capacity, and has outlined a number of privatisation initiatives whose implementation is to commence immediately.

"One key objective is the mobilisation of private sector capital and expertise to support the growth of most of these institutions," Kitungu said.