One person can open a shop but credit goes to the one who manages to keep its doors open.
Jamii Bora Bank owners opened the shop but Cooperative Bank of Kenya has come to keep it afloat, to fulfill the purpose of a bank – guarding depositor’s money and helping them grow through credit.
Through the Sh1 billion deal, Co-op Bank is now in the controlling seat of Jamii Bora, which will now run as Kingdom Bank and don the green colours that are the signature of its new owner.
Co-op Bank itself was in a similar situation. But the ‘soaring eagle’ agenda that was unveiled by managing director Gideon Muriuki re-tooled the business, placing it on a growth trajectory. Mr Muriuki in 2008 led the directors in making a faith-based declaration that is now engraved in the boardroom.
“Co-operative Bank shall be the Kingdom Bank through which God will bless His people of Kenya,” reads the declaration.
A year later, on June 11, 2009, Kingdom Securities – a stock brokerage firm – was born, embedding the declaration.
This was through the acquisition of a 60 per cent stake in the then struggling Bob Mathews Stock Brokers Ltd. A decade later, the Kingdom name has come again. This time, through Jamii Bora, a lower-tier lender that has been facing liquidity and capital constraints.
“The acquisition offers Co-op Bank the opportunity to cross-sell and deepen product offering to the enhanced customer base and create a niche bank to offer specialised credit offerings,” said Muriuki on the deal.
On his radar will be micro-small and medium sized entities, youth and women products as well as asset financing and leasing.
But how did Jamii Bora Bank fall? Losses were coming, market share was shrinking and existing shareholders were all but watching in despair.
Jamii Bora traces its roots from humble beginnings of Ingrid Munro, the Swedish architect who started Jamii Bora Trust in November 1999. She took cue from her husband, who in 1987 started Mathare Youth Sports Association (MYSA) that has produced many young talents from the slum areas.
Ms Munro mobilised destitute families on the streets of Nairobi to give 50 cents a week.
She then grouped them into credit groups of about five so that they could guaranteed each other small loans. Members were allowed to borrow up to twice their savings. With support from other financiers, the organisation was on growth trajectory, making it attractive to investors.
The trust was in March 2010 acquired by City Finance Bank (CFB), a small private financial services provider, which rebranded it into Jamii Bora Bank.
The deal did not achieve the much-needed stability. It desperately needed capital to try another luck in turning around its fortunes.
Baraka Africa Fund (BAF), a consortium of local investors, teamed up with other individual investors and acquired a 51 per cent interest in CFB, giving it control in Jamii Bora. Samuel Kimani and Timothy Kibiru left KCB Group in 2011 and joined Jamii Bora.
The two became the largest shareholders in the bank with a 25 per cent stake valued at about Sh320 million.
Riding on this stake, Mr Kimani was made the CEO six months later. Mr Kimani turned to a rights issue in 2011 and 2012, where he raised Sh270 million and Sh520 million respectively from shareholders. This gave it Sh1.3 billion core capital.
Another decision was made in 2013 to go for a private placement bond of Sh1 billion. The bond was oversubscribed by two per cent.
The following year saw Jamii Bora seek another Sh1 billion through a combination of a rights issue and converting part of debt into equity as it expanded branch network.
Two blunders cost the bank. That of buying a controlling stake in Uchumi Supermarket and lending about Sh500 million to Kenya Airways.
The big dream that Jamii Bora owners had has now been reduced to a 10 percent stake. They can only hope that through Co-op Bank, they will enjoy the fruits of the new found Kingdom Bank.