NIC Bank branch in Nairobi. FILE PHOTO | NMG The Treasury has exempted the merged CBA and NIC bank from paying share transfer tax running into hundreds of millions of shillings.
Suspended Treasury Secretary Henry Rotich had exempted the transfer of CBA shares into NIC Bank from paying stamp duty of one percent of worth of the unquoted stocks being transferred.
The transaction is taking place though a share swap between the two banks, with current NIC group shareholders owning 47 percent of the merged entity and CBA shareholders including the Kenyatta family owning 53 percent of the merged entity.
NIC Group will remain listed, suggesting a transfer of the CBA unquoted shares, which makes them liable for the one percent stamp duty tax.
The deal did not quote the value of CBA shares, but analysts estimate the value of 53 per cent stake at Sh35 billion based on the book value of Sh65 billion when the deal was announced—putting the stamp duty charge at more than Sh350 million.
“The Cabinet Secretary for the National Treasury and Planning, on the recommendation of the Cabinet Secretary for Lands and Physical Planning, directs that the instruments executed in respect of the transactions relating to the merger of NIC Group PLC and Commercial Bank of Africa shall be exempt from the provisions of the Act,” Mr Rotich said in a June 26 legal notice that was made public Friday. Stamp duty is a tax charged on several transactions such as transfer stock, land and houses and ranges from one percent to four per cent of the property value.
Transfer of unquoted shares like the CBA stock attracts a stamp duty of one percent, but sale of quoted shares like NIC bank’s are exempted from the tax. The merged bank will have an asset base of Sh466 billion, making it the region’s third-largest after KCB and Equity.
The merged lender will count among its top owners some of Kenya’s most renowned billionaire investors and political figures, shareholder information on the two lenders has revealed.
The Kenyattas currently hold a 24.92 percent stake in CBA while Phillip Ndegwa family, which founded NIC Bank, has a 25 percent interest in the listed lender.
Businessman Naushad Merali will end up with a 2.9 percent equity based on his present direct ownership of a 5.6 percent stake in CBA.