We won’t relinquish our stake, declare Co-op Bank owners

By James Anyanzwa

Major shareholders of Cooperative Bank have agreed not to sell their shares in the bank following the expiry of a five-year lock in period sanctioned by the Capital Markets Authority (CMA).

The Board of Directors of Co-opholdings Cooperative Society, which control 65 per cent stake of the bank, said the end of the lock in period does not mean that the Society and Sacco investors in Co-opholdings are keen on offloading their shares at the Nairobi Securities Exchange (NSE).

In a circular to all stockbrokers, investment banks and fund mangers yesterday, the board of Co-opholdings explicitly dismissed as rumours that the company could dispose off its investment in the bank.

“We are extremely proud of our strategic investment and the board of Coopholdings Cooperative Society has resolved not to dilute its strategic shareholding in the bank in the foreseeable future,” said Co-opholding Chairman Stanley Muchiri.

Fund use

Because of the five-year lock in for Co-opholdings, the bank directors and senior employees averted the fear of the pricipal shareholder dumping of the bank’s shares on the secondary market.

Coop Bank, the country’s third largest bank by assets (over Sh200 billion in asset base), has a growing network of over 120 branches and over 3.3 million customers.

The bank has sustained its operational restructuring as indicated by a Sh10 billion profit last year, from a loss of more than Sh2 billion recorded in 2001.

Headed by Mr Gideon Muriuki who has successfully steered through its turnaround strategy, the bank issued an additional 701.3 million shares (19.3 per cent of the bank’s issued ordinary share capital) to the public through an initial public offering at an offer price of Sh9.50 per share in 2008.

The listing was meant to facilitate the bank’s growth and expansion programme and enable its 57,000 existing shareholders to freely trade in their holding on the NSE.

In the IPO, billed to be the second largest after Safaricom, more than 57,000 individual shareholders of the bank bolstered the value of their investment after the listing.

Pursuant to a restructuring of Coop Bank’s governance structure, the bank was listed on the NSE in 2008 with Coopholdings Cooperative Society Limited being incorporated as special purpose vehicle to ‘warehouse’ the 65 per cent strategic investment in the bank by the cooperative movement.

Under the CMA listing approvals Coopholdings Cooperative Society shares in the bank were locked in for a period of five years. The 65 per cent block of shares under the Co-opholdings was designed to retain the critical co-operative identity of the bank.

Co-opholdings has over 3,800 individual cooperative society shareholders with a well-established Over-The-Counter (OTC) trading of shares held by the societies. Trading of these shares is only open to registered co-operative societies.