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Wednesday, August 15, 2007

Who Wants To Kill Equity Bank?

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Even as the price of Equity Bank shares on the Nairobi Stock Exchange appears to be recovering over the last few days, somebody is forwarding nasty emails warning Kenyans to stay away from the bank.

The reason I find this interesting is that I have carefully studied the growth of Equity right from the time it was launched as a building society in the Moi days. I correctly predicting that they would one day be very big, because they did the opposite of what other banks were doing at the time and targeted the ordinary mwananchi. As you read this, the bank has got over one million account-holders, a record in Kenya.

The way to analyze a company is to look at how it makes its' money. As a rule I will never invest in a business that I do not understand. Equity's major profit generator is small loans to ordinary folks. If you understand the principal of compounded interest you will quickly realize just how wildly profitable this activity can be.

So the foundations of Equity are basically sound...

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6 comments:

Phil said...

It would be useful Chris, as anonymous suggests, if you could provide facts and figures before posting this sort of information. And I really doubt if you mean what you say here.

I invite you to visit this link (that contains facts and figures) and you will learn a few home truths about this Equity Bank.
http://www.filenanny.com/files/46a0ef9bd221d4158/Equity%20bank%20Shah%20Patel%20memo.pdf
Its a memo to Kimunya to take action on Equity, and so far Kimunya has done nothing and "mainstream press" is ignoring the glaring facts provided by this Mr. Patel.

I mentioned in this very forum a few weeks ago about a company known as Trans-Century. Did you bother to investigate it? I do not think you did, because if you did it would make you change your mind immediately.

Trans-Century, happens to be connected to Equity through Mr. Jimnah Mbaru who also happens to be NSE boss. TC has a huge appetite for acquiring about all of the public assets the government of Kenya decides to privatise.

I also want to disagree with you on the issue of the phenomenal growth experience by Equity. It is an open secret that Government has played a big role in turning around the fortunes of this bank. Infact, I put it to you Equity (although it is a private business) has received millions of shillings of grants and loans from donors through the blessing of the Kibaki regime to aid the government's poverty eradication programme. This is a role any publicly owned bank like Co-op Bank or other would have been best placed to handle. Not that Bank whose Board members are known to be insiders in Kibaki's kitchen cabinet and DP financiers. What is the official language of the Board of Directors of Equity Bank? I dont want to mention it because some people will misinterpret it to mean we are attacking certain tribes.

There are so many other micro-finance companies that can disburse loans to Kenyans. Why Equity and Equity alone?

The NSE has been totally misused and now the same group of individuals with connections in Equity Bank are is eyeing Telkom and Safaricom IPOs.

Give us another one Chris. This Equity Bank is actually a threat to national security because a small clique of people have been aided by government to own a very large part of the economy and they can actually hold any government that takes over at ransom.

emurithi said...

Below is a copy of the email in circulation.
First disqualification: A BANK TELLER AT A BRANCH KNOWS ALL THIS??? No way, even an assistant Accountant couldn't be able to get such information in the course of normal duty.
Fear some more



Dear readers,
> You may never have heard of me...but worry not
> because i mean no harm at
> all.I work at Equity bank as a cashier at a branch
> in town but am
> looking for a job since i see no future with this
> bank.I just want to
> warn you,be VERY careful about EQUITY BANK.All is
> not as rosy as it
> seems.There are people playing Russian roulette
> with hard earned savings
> of Kenyans and the unfortunate thing is that the
> low income earners are
> the ones who will be affected by the eventual
> collapse of Equity
> bank.The revelations in parliament recently is
> just a tip of the
> iceberg.The Bank is actually in the RED.The fact
> that it is surviving is
> because it has got political backing right from
> the country's top
> executive.The youth development funds being
> channeled through it and
> also the womens development fund are just a cover
> up.Those funds from
> government are actually being used to give the
> bank the much needed shot
> in the arm.This is for the simple reason that
> there have been large
> payouts to well connected individuals in the form
> of unsecured loans
> that characterised the growth of now collapsed
> banks such as Trade
> Bank,Delphis Bank,Bullion Bank and Trust bank.The
> top CEO's portfolio is
> also very suspect and top management is composed
> of individuals from one
> community.The Assistant Minister Peter Kenneth
> claimed that the manager
> resigned in !982 from Trade bank,however,note that
> Trade bank was not in
> existance then!
> The ambitious expansion embarked on by the bank
> and the installation of
> ATM machines in record time is also very
> suspect.To refresh your
> mind,you can remember that just before the
> collapse of UCHUMI Chain of
> supermarkets,they had embarked on a countrywide
> expansion,opening up
> stores in almost every town.if in doubt,ask
> yourself why banks that have
> been around for quite a while like the
> Co-operative Bank have not had
> such expansion rates despite mainly catering for
> the low income
> earners.in short,this is a classic case of a
> pyramid scheme,only these
> time,its on a large scale.For the price of a share
> to shoot to an all
> time high for a company that has been on the stock
> exchange for less
> than a year leaves a lot to be desired.Watch this
> space dear kenyans,and
> you will quote me right in days to come.
> There is a way out though...the time to get out is
> now.Its better to
> keep your money under a bed/matress than wait for
> a few people to steal
> it and forever never step in the inside of a
> courtroom.I know each of
> you has got a relative,friend,sister or brother
> associating with this
> bank.please help them by talking to them.Don't
> force them but just be
> gentle.This is an election year and politicians
> are desperate to get
> money for dishing out,and by putting money in
> Equity Bank,you have
> willingly funded them for their greedy
> gains.FAMILY FINANCE is also part
> of the gravy train but that is just a story for
> another day.You are
> welcome to dismiss me as a false alarmist,arguing
> without facts,but
> sometimes its the blind lead the way.Please foward
> this mail to as many
> Kenyans as you can.You will have saved s another
> Goldenberg,saved us
> another anglo leasing and enabled a soul to live
> another day.
>
> on Yahoo! Travel.

David Mwangi said...

It seems some people are unhappy that some individuals have done well for themselves. I would support indigenous banks any day before going to the multinationals, who only channel profits outside the country. If equity is engaged in anything illegal, there are right channels to deal with that. These allegations appear like porojo to me, but I don't have first-hand knowledge though. The board of drectors can use any language they wish.... and if anyone doesn't like it, ameze wembe.

Phil said...

When you are a commercial bank and you handle public money you have to be prepared to be audited publicly.

I wonder why some people want to turn blind eye to what is obviously very very suspicious and underhand dealings in the banking sector and the capital markets.

There so are many reasons why Equity and associated individuals needs to be investigated, but it cannot be because its CEO Mr. 'Trade Bank 200 million' Mwangi has his godfathers heading the ministry of finance and the CBK. So for now, he is safe and sound, until the bank collapses with millions of depositors money, and he goes underground. It has happened before, why cant it happen again?

David Mwangi said...

If I am unhappy with a bank or I think/know they are doing something underhand, I move my money somewhere else... that is capitalism. If I am unhappy with the way state institutions are doing their work or I think they are compromised, I use my voters card to vote in a government which I believe can fix that .... that is democracy. Kenya is both a democratic and capitalistic nation. If I am a Luo and I don't like that the board of directors use kikuyu in their meetings, I take my money elsewhere or sell my shares. This constant whinning is just sickening!!

Anonymous said...

Phil you should verify facts before you start ranting here. The standard published Mr Patel's concerns and more to that, they also put down the reason as to why Ms Wanjiku Mugane a former director was told to step down. It beats me for people like you who have internet cannot get such info. Ama what do you mean by mainstream media if all you read is the Nation. I believe the Standard is also among them.Since it can be quite a task getting the July 17th paper, use this link,http://eastandard.net/mag/mag.php?id=1143971444&catid=50
Kumekucha you may also check out this. Equity is good bank but there are also some terrible things about it.I personally don't dispute it's phenomenal growth. But there is more than meets the eye. Please let's be level headed as we scrutinize this bank.

Mathew

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