Treasury and NSSF delaying National Bank's rights issue

Disagreements between Treasury and two State agencies has delayed the Sh13.5 billion rights issue by National Bank of Kenya (NBK).

Central Bank of Kenya Economic Planning Chief Geoffrey Mwau said Treasury, National Social Securities Fund (NSSF) and the Privatisation Commission had failed to agree on the redeeming of the shares leading to the stalled rights issue.

"Whereas NSSF is ready, there is a delay from Treasury to give approval for the rights issue and one of the things that has brought the delay according to them is that they have been evaluating the merger of Government banks," said Mr Mwau.

Speaking when he appeared before the the National Assembly Public Investment Committee to shed light on the fate of the NBK, Mwau said Treasury was still evaluating the possible merger with Development and Consolidated banks or look for a strategic partner who can take over its shares and inject capital and boost managerial expertise.

Capital Markets Authority acting Chief Executive Officer Paul Muthaura said for two years, Treasury had not indicated its intention to participate in the issue.

Mr Muthaura said a request was made to the principal shareholders, NSSF and Treasury, which held 48.06 and 22.5 per cent equity to confirm their interest in the right issue.

Muthaura said the purpose of the rights issue according to NBK was to boost the bank's capital base and enhance the its competitiveness in the marketplace as well as elevate the bank to the top tier.