Sale of Orient Bank awaits BoU approval

Orient Bank Ltd, established in 1993, is one of the commercial banks regulated by BoU.

In a telephone interview with Daily Monitor, the Orient Bank Ltd Commutation Manager, Ms Ronnie Zalwango, said the matter is still subject to regulatory approval.
“We are still engaging the regulator on the matter. This is what I can say as of now, we will give an update,” Ms Zalwango said.

The BoU executive director supervision, Mr Tumubweine Twinemanzi, said they held discussions with Orient Bank and are waiting to receive their request in writing. He added that he doesnot expect any objection since I & M is a big bank and listed company.

From the Kenyan side, it is understood that I&M Bank is also engaging the Central Bank of Kenya and the Capital Markets Authority on the matter.

Business Daily on July 20 reported that I&M Bank is likely to spend more than Shs2b in acquiring Orient Bank Ltd.

Asked by Daily Monitor about the price, Ms Zalwango said she currently has no information.
In its cautionary statement, the I&M Holdings Plc, informed its shareholders that the company had on July 17 entered into an agreement with the shareholders of Orient Bank Ltd for the sale and purchase of shares comprising 90 per cent of the issued capital of Orient Bank Ltd (OBL), a company incorporated in Uganda.

“The proposed transaction may have a material effect on the value of the shares of the company. The shareholders of the company and the public are accordingly advised to exercise due caution, when dealing with in the shares of the company,” reads in part the cautionary statement.

In November 2002 Orient Bank successfully out-competed other banks in taking over TransAfrica Bank Ltd.
This followed a Bank of Uganda invitation bid, which Orient Bank won due to its professional, technical and banking soundness.

In 2019, Orient Bank’s total asset stood at Shs814.079b, up from Shs749.681b in 2018, while its core capital was Shs57.160b in 2019 compared to Shs80.776b in 2018.

Orient Bank’s customers’ deposit stood at Shs673.614 b in 2019 compared to Shs618.079 b in 2018.
In terms of loans and advances, the bank registered Shs305.516b in 2019 compared to Shs334.103b in 2018.
Its non-performing loan stood at Shs60.027 b in 2019 compared to Shs14.807 biin 2018 and it wrote off bad loans of Shs11.255b in 2019 compared to Shs7.829 billion in 2018.

For the last two consecutive years, Orient Bank has been making losses after tax. For instance, it made a loss of Shs1.075b in 2019 compared to Shs5.516b in 2018.
Other latest developments indicate that the bank is scaling down its branches network as of June 23, announcement by the management.

“Effective August 1, we will merge our branch operations below; Katwe and Nakivubo branch operations will be merged into Kikuubo branch located at Grand Corner House. Ben Kiwanuka and Kisekka branch operations will be merged into William Street branch located at Plot 44, William Street.

Makerere branch operations will be merged into Acacia branch located at Acacia Mall, Kisementi. Our ATMs at Ham Towers, Makerere and Muganzirwazza Plaza, Katwe will not be affected,” Orient Bank Ltd management said in a press statement.

About the buyers
Information on the website of I &M indicates that the bank was founded in 1974 as a financial services company and later converted to a commercial bank.
I&M Bank is a wholly-owned subsidiary of I&M Holdings Pplc, a publicly quoted company at the Nairobi Securities Exchange (NSE).

I&M possesses a rich heritage in banking.
Started in 1974, it evolved from a community financial institution to a publicly listed major regional commercial bank offering a full range of corporate and retail banking services.
From June 2013, I&M Bank shares are publicly traded in the Nairobi Stock Exchange through the acquisition of its entire shareholding by I&M Holdings Ltd, a publicly listed company.

I&M Bank is a dominant player in the Kenyan market that has been consistently growing, and is innovative in terms of the type and range of products and services it offers.

CDC Group Plc, a development finance institution wholly owned by the government of the United Kingdom, owns approximately 10.68 per cent of I&M Holdings, the holding company of I&M Bank Ltd.

In addition, I&M Bank has a technical support agreement with International Finance Corporation for staff training, product development and risk management. I&M Bank also enjoys medium-term foreign currency credit facilities from European Development Financial Institutions – Proparco, IFC, DEG and FMO.

I&M Bank’s international correspondent banks include major multinational banks such as Bank One Ltd, Citibank NA, CommerzBank AG, Deutsche Bank AG, ICICI Limited Mumbai, Mashreq Bank PLC, Standard Bank of South Africa, and Standard Chartered Bank NY.

I&M Bank’s international network includes Bank One Ltd (Mauritius), I&M Bank Tanzania Ltd and I&M Bank Rwanda Ltd. I&M Group I&M Bank Ltd is also the flagship company of the I&M Group of Companies, a leading corporate group in East Africa.

Current Orient bank share holders

Ketan Mojaria 49.0 per cent
8Miles Fund 42.0 per cent
Alemayehu Fisseha 4.5 per cent
Zhong Shung Quan 4.5 per cent