Regulator caps private stake in mortgage firm

Central Bank of Kenya says the non-deposit taking financial institution will increase availability of mortgage loans. [File, Standard]

Commercial banks have been restricted from owning more than 25 per cent of the Kenya Mortgage Refinance Company (KMRC).

This is as the Government starts putting in place structures that will operationalise the entity expected to play a critical role in enabling Kenyans to buy affordable homes.

The Central Bank of Kenya (CBK), in new rules that will guide operations of the mortgage body, capped the shareholding of the private entities in KMRC at 25 per cent each.

Cheap loans

Public entities and multilateral development lenders such as the World Bank and the African Development Bank (AfDB) are however exempt from this rule.

Numerous local banks have expressed interest in investing in KMRC, which will offer cheap loans to banks for onward lending to Kenyans.

KMRC is part of the State’s ambitious plans to build half a million houses by 2022.

“A shareholder of a mortgage refinance company shall not, whether directly or indirectly, hold more than 25 per centum of the shares of the mortgage refinance company unless it is a public entity or a multilateral development bank,” reads the regulations on KMRC gazetted by CBK on August 2.

Despite the restriction, private sector players are expected to be the majority shareholders of the new firm, with Treasury previously saying that it will be operated in public-private partnership fashion. Private players will own 80 per cent of KMRC.

During its launch in May, Treasury said it had been undertaken a capital mobilisation exercise that resulted in eight commercial banks, one microfinance bank and 11 Saccos becoming shareholders. 

It added that the International Finance Corporation and Shelter Afrique were keen to take up shareholding.

KMRC, which was set up in April 2018 last week sought for a human resource consultant to help it develop the terms for the staff as well as develop an organisational structure, salary and benefits structure and a human resource manual.

The National Treasury will own a 20 per cent stake in the firm. Treasury’s investment of Sh1.5 billion will serve as the initial equity share capital of the mortgage company.

The World Bank in April approved Sh25 billion credit while the AfDB approved Sh10 billion to support the programme in May.

The funds will enhance access to affordable housing financing and expand the KMRC balance sheet.