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Citizen Weekly

Sunday 30 November 2014


The Co-operative Bank of Kenya has engaged the services of McKinsey and Company, the globally recognised management consulting firm, to advise the bank on their 2015-2019 Corporate Strategic Plan.
The bank intends to draw up a Transformational Strategy that gives fresh impetus that will sustain the growth momentum that the bank has attained so far. Co-op Bank has achieved remarkable turnaround against significant odds to become the third largest and also one of the most profitable banks in Kenya, with an asset base of Sh270 billion and a profit before tax of Sh9.13 billion for the nine months of 2014.
Meanwhile, the Weekly Citizen has since independently confirmed that a former managing director of the bank and also a former MP for OlKalou Erastus Mureithi has allegedly been behind the anonymous hate mail/blogs on the bank. Mureithi was retired early by the bank’s board of directors in 2001 following huge losses wherein the bank was on the verge of collapse with a huge Sh2.3billion loss. Mureithi is in court with the bank on various matters that have been in the media. In one case, Civil Suit No 175 of 2003 before Justice JB Havelock, Mureithi has been ordered by the High Court to refund the bank various unpaid taxes to Kenya Revenue Authority which now are in excess of Sh25million. Clearly, he would have an axe to grind with his former employer.
Upon leaving the bank, Mureithi joined politics, where he served as MP for OlKalou for one term and lost following an abysmal performance, having garnered a paltry 2,000 votes in the last general elections.
As the saying goes, when it rains it pours. His multibillion flower empire Suera Flowers has recently ground to halt, plagued by gross mismanagement and irreconcilable marital differences. He used to be one of the largest flower exporters in Kenya, but is now facing severe challenges of survival. It reminds one of the deathbed status he left the co-operative movement in when forced out in 2001.
Co-op Bank listed in 2008 to raise additional capital, in a process that was fully approved by shareholders and all the necessary government regulatory agencies that included the ministry of Finance, the Central Bank of Kenya, the Nairobi Securities Exchange and the Capital Markets Authority. Full disclosures were done vide a detailed information memorandum dated October 27 2008, as provided for in rules governing IPOs.
The IPO was even cleared to progress by the ParliamentaryFinance, Planning and Trade Committeethen chaired by Chris Okemo on September 23 2008.
Coming just months after the 2008 post-election violence, the Co-op Bank IPO nonetheless succeeded to raise Sh5.4billion, which helped the bank to substantially boost its capital. It was perhaps because of this success against such significant headwinds that the IPO was recognised with the award of ‘Best IPO in Africa 2008’ by the Africa Index Awards.
Co-op Bank is predominantly owned by the 8,000,000 member co-operative movement, that is the largest in Africa with over 12,000 co-operative societies, cutting across all sectors of the economy. The shareholders approved a strategic vehicle – Co-op Holdings Co-operative Society - that holds a block shareholding of 64.5pc on behalf of co-operatives, to safeguard the co-operative identity of the bank. Individual directors’ holdings in the bank as per published audited accounts are an aggregate total of only 3pc.
Majority of Kenyans may not be aware that other countries in Africa used to have their own co-operative banks, but which ceased to exist for various reasons, chief among them being collapse on account of mismanagement. This regrettable trend was however defied by the Co-operative Bank of Kenya, which survived this threat in 2001 and is today the largest co-operative bank in Africa.
As Africa and indeed the world seeks to establish new economic models that deliver inclusive growth, the co-operative model is increasingly looking attractive in this respect. It is for this reason that many African countries continue to visit Kenya, to learn how they may replicate Kenya’s successful co-operative model. Co-op Bank on its part also continues to host many delegations from various other countries that are keen to replicate the co-operative banking model.
With a firm foothold in Kenya and expansion to the region notably with presence already in South Sudan, Co-op Bank is on track to beat the odds once more and continue to deliver great service and returns to the co-operative movement and shareholders.

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