Drug Money!!
written by auntie skeptic , January 25, 2007

Wow 900/-!! For real? Maybe to hold for some more demand? How eminent is the announcement? Man, where do you think this will settle after the merger?

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written by Kamale , January 25, 2007

I think the 900/- sale was by a person not very clever on how to trade on the new system! The poor fellow gave instructions to buy at Market which means that if someone placed his shares for sale and quoted a price of 900/- then the ATS system will first allocate the shares to those who want to buy at Market before those who request for reserve prices!

One needs to understand these systems, though if you asked me, this is a serious flaw in the ATS system. This is the second time I am hearing of a similar case.

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written by Riba Capital , January 25, 2007

CFC Bank hit a high of Kes: 900.00 today.
This is after the news of its acquisiton by Stanbic having hit the market.
Considering the merger price is as of 18th January 2007 (around Kes:115.00), I would consider this share a SELL at this price (profit-taking level).
The share is likely to be suspended from trading when the parties seek approvals from CMA and CBK.

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written by kendirangu , January 25, 2007

Kamale I thought thats what brokers are for.
Actually even though I order them to buy at market price, in such a case my broker should alert me that the market price has risen by a considerable percentage.

Poor fellow he wont sleep tonight. :twisted:

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written by Kamale , January 25, 2007

kendirangu,

That was the case when the had a 'cry' method of trading. Now with ATS, all orders are placed in the system and matched against price. If your broker does not tell you that you should never order at Market, then badilisha yeye!!

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written by Joe Duncan , January 25, 2007

So because south africans are buying a Kenyan Bank it will automatically succed? Look at what happened to Uchumi after we hired the South African expert. If Americans say they are moving to Mathare, tin houses with be more expense that Muthaiga Manson(s). What happened to the basic fundamentals of finace..else we wouldn't have a price hick to upto sh900!

The Over-valued NSE
written by pndiangui , January 26, 2007

At the current demand of stocks by reformed pension funds, informed retail Kenyans who are more short-term traders while the IPO's to the NSE are not forth-coming to meet the same demand, it is imperative we start going to some-fundamentals of finance.
Lets look at the EPS, the P/E of these stocks, the cash-flow , debt-levels and the most diffcult thing the future outlook of these stocks.
I know speculators dont bother a sec on this but its time to exercise caution and sensible value buying.

Riba
written by Ignoranto , January 26, 2007

When are the talks likely and where do you think the price will settle? I hope by exchanging back and forht here, where there are many members we can get better knowledge than we would on some individual blog somewhere.

Why do you think the new bank would be a bad thing for kina Barclays? Does their size not buffer them against such competititon as this? What is the difference in rates?

Hope we can get some analysis, or reference to some. Many of us out here want to invest back home, but need some guidance. Help!

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written by Stephen Wanyama , January 26, 2007

Ndiangui,
The trouble is that there are so many 'millionares' about who have made a quick buck on the NSE. In addition there's so much money about and very few good companies so the shares will stay over-valued.

I hope that Riba's contributions here will be larger than the pithy ones he submits on his blog, a little more research to back up the assertions. Kudos for the figures from the Market Intelligence Report.

Kestrel
written by emmo , January 26, 2007

Kestrel provides two detailed reports on Barclays , Equity and KCB. Note that these files are PDF's. They are not the most recent but would help anyone trying to understand the Kenyan banking industry.

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written by Stephen Wanyama , January 26, 2007

The real war will be over the large number of unbanked Kenyans. 13 branches, assuming none are closed post merger still does not seem enough to me, even for a bank that is targeting high value customers only.

Riba,
Why did the talks with NBK fall through?

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written by Riba Capital , January 26, 2007

On CFC and Stanbic merger; this is good for CFC; since they will now be backed by a very financially capable shareholder and their capitalization woos should be a thing of the past.
For Stanbic its a dream merger as they will now hold local insurance, investment banking, brokerage etc. licenses which should allow them diversify their product offering and as transfer knowledge from their other African markets to the local franchise.

The best route for kenyans in diaspora who want access to qualified research and professional services is through the more established names eg. African Alliance investment bank which after you create a portfolio worth its sorts(more than Kes:1M) you get access to research reports or even Kestrel as mentioned by Emmo.



The NBK talks were mainly shadowed by the bad loans portfolio of NBK and the Government should act on this if the expect to interest investors with this company.

What about the culture synerg
written by pndiangui , January 26, 2007

Riba and all
I can see the kind of synergies stanbic would be looking for in CFC , but these synergies need a complementing corporate culture at CFC. With the former directors and Board members mentioned in CFC , I am yet to see the how a cultural fit would be ensued in this mearger.
Infact it might be more or less stanbic 'taking over' CFC than a mearger deal.
The availability of deep pockets in Kenyan banking might not be the real issue at the current global liquidity but the ability to take on the unbanked kenyans while still providing access the the banked community with more attractive financial products. The later one might be created in the mearger of which anyway Stanbic might have had the experience providing these products in South Africa but the earlier course of meeting the needs of unbanked SME and Kenyans will still be hard for the mearged enitity to crack. And to me this is where the real opportunity is.
Going with the price of stanbic bank stock after its IPO in Uganda , I think for a CFC customer to be 'acquired' by stanbic is itself a premium but I dont see much of any synegies that will be created here.
I think if the shareholders of CFC re-structured their portfolio by selling some CFC in NSE and buying some stanbic in UG to hold both stocks, itself presents a better opportunity than the merged entities.
Non-the-less I will carry out some more research on this mearger deal.

Takeover not a merger
written by MainaT , January 26, 2007

For your information, this is a takeover not a merger. A merger is when two companies join together as equals. In this situtation, Stnabic is taking a controlling stake in CFC. So what? This will mean that unless CMA agree to it, CFC will have to be de-listed as Stanbic is not a listed company. As far as the synergies go, it will just be a bigger entity and I can't see how that automatically translates into being more competitive...

CFC Kes: 900.00 Error
written by Riba Capital , January 27, 2007

The NSE chairman has finally spoken about the price of CFC shares at Kes: 900.00 and declared it a mistake in the system even raising more concern on the resolution of issues arising from the new automated trading system.
This raises doubts on the integrity of the ATS and the whole idea of when a deal should be considered irreversible after execution.
He claims that the broker will have to refund their client and reverse out this deal.
They should have also addressed the movement of CityTrust shares in the same manner; when the share rose by Kes:500 on a volume of 2,600 shares only and the volatility of East African Cables which occured before its share split. Which Jimnah Mbaru was a direct beneficiary.

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written by Kamale , January 27, 2007

Well the comments by Mbaru only fortify what I said earlier.

I am not sure the Cables split was ATS driven. Unless Mbaru was buying or selling the shares of cables, how would he be a beneficiary? His membership of Trans-century would not have benefitted him as the people that made any money are those that traded in the stock.

I also think we are blaming ATS entirely without perhaps seeing the alternative picture. The proposed deal does not have a price and this will be determined on the basis of the average trading price of the stock during the month of February. So it is possible that the price was marked up to push the average!

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written by Riba Capital , January 29, 2007

Kamale: The CFC-Stanbic deal's price will be determined with reference to amongst other factors the market price of CFC Bank shares on the NSE over a 30 day trading period ending 18th Jan 07. Therefore the current swings will not be used.

The Transcentury acquisiton of Housing Finance failed because of a similar situation though, whereby the offloading company insisted on getting more money due to the increase in the share price.
But in this deal, this was anticipated and thus this clause included to prevent conflicts.

On the Mbaru deal, he benefitted because his worth through his stake in Transcentury grew by hundreds of millions. When a share price appreciates, whether you offload your stake immediately or not, your worth has appreciated by a similar margin less transactional costs.