Co-op Bank

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The Co-operative Bank of Kenya Ltd.
Co-opBank.jpg
Founded 1965
Headquarters Nairobi, Kenya
Key People CEO and Managing Director Gideon Muriuki, Chairman S. C. Muchiri
Products Retail and commercial banking
Website http://www.co-opbank.co.ke/Main-Site/Home

The Co-operative Bank of Kenya Ltd, better known as Co-op Bank, is Kenya's fourth-largest by assets and one of its fastest-growing. Co-op Bank's IPO on the Nairobi Stock Exchange in October 2008 raised 4.7 billion Kenyan shillings in new capital, 30% short of its target, and the bank has recently traded just marginally above its offer price.

History

The Co-operative Bank of Kenya registered in 1965 as a co-operative society and received a banking licence three years later, formally opening for business on January 10, 1968. After two decades of growth, Co-op Bank created the position of Managing Director/Chief Executive in 1989 and five years later converted itself into a commercial bank to offer a complete range of financial services.[1] It now competes with home-grown Kenyan banking giants like Equity Bank, Kenya Commercial Bank and Diamond Trust Bank.

After Co-op Bank was badly hit by a terrorist bombing in 1998 and subsequently posted a loss in 2000, the subsequent appointment of Gideon Muriuki (see below) as managing director and CEO turned business around and profits have grown sharply almost every year since. Co-op Bank's 2008 projected pre-tax profit was KSh 3.2 billion compared to KSh 3.2 billion in 2007.[2]

2008 IPO

But last fall's Co-op Bank initial public offering (IPO) of 701 million shares, 80% subscribed, was not considered a big success and Co-op Bank officials and IPO organiser the Capital Markets Authority of Kenya (CMAK)[3] were criticized by some financial commentators for conducting the sale in October 2008, in the throes of a global financial meltdown.[4] When the IPO closed in mid-November the original offer price of KSh 9.5 had grown to KSh 13.5 but soon dropped to around KSh, where it has stabilized for the two months to February 2009.

The IPO eventually raised significantly less in new capital than the Co-op Bank's revised target of KSh 6.7 billion - KSh 4.7 billion according to one magazine[5] and KSh 5.4 billion by Co-op's numbers. Co-op Bank's target prior to the IPO's commencement was to raise KSh 10 billion in new capital but Muriuki was forced to lower the target to Ksh6.7 billion in mid-offer, in the midst of a ferocious bear market.[6] Co-op Bank listed on the Nairobi Stock Exchange at around KSh 13 shillings but has since fallen to around KSh 10, barely above the IPO price of KSh 9.5.

Key People

Managing Director and CEO Gideon Muriuki has been at the helm as MD since March 2001, when he replaced the retiring Erastus K. Mureith. Muriuki joined Co-op Bank as senior manager of commercial and corporate banking in 1996[7] and was promoted to General Manager - Corporate and Institutional Banking in 1999. Co-op Bank has recorded an increase in profitability every year since Muriuki's elevation to the top job.

Latest news

Increased trading by expanding Kenyan broker and investor Afrika Investment Bank (AIB) pushed Co-op Bank to the top of NSE's most actively traded of its 54 listed stocks by late January 2009, Business Daily Africa (BDA) recently reported.[8] AIB, formerly Ashbu Securities, was also an active player in selling a large tranche of Co-op Bank rival Equity Bank the previous month, BDA noted.

References

  1. History. Co-op Bank.
  2. Co-op Bank IPO plans on top gear - press release. Co-op Bank Media Center.
  3. SHARES OF CO-OPERATIVE BANK OF KENYA - APPROVAL FOR THE OFFER FOR SALE AND LISTING OF THE ORDINARY SHARES OF CO-OPERATIVE BANK OF KENYA LIMITED. Capital Markets Authority of Kenya.
  4. Opinion - Why Kenyans get it wrong on stocks by Douglas Opiyo. The Nation.
  5. Kenya: Co-op Bank IPO Short by KES2bn. Ratio magazine.
  6. Bear run forced Co-op Bank to adjust IPO target. Business Daily Africa.
  7. Gideon Muriuki. ICBA.
  8. Big investors take charge at NSE. Business Daily Africa.