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Potential merger NIC + CBA
watesh
#241 Posted : Thursday, July 16, 2020 10:22:02 PM
Rank: Member


Joined: 8/10/2014
Posts: 836
Location: Kenya
VituVingiSana wrote:
watesh wrote:
Ericsson wrote:
In their Notice of the Annual General Meeting on 5th July,NCBA is going on a dividend drought for 5 years.

Or they may go for a small cash dividend plus a bonus. They want to go aggressively into retail banking, they need to prop up their core capital base to keep up with the expected growth.

NIC was into retail lending.
CBA was into retail lending via Safcom.

Kenya's lending scene is very competitive. Perhaps a regional acquisition?

The KE banks that have done best regionally are DTB, I&M and Equity.
These have a decent presence in the region with subsidiaries that make a meaningful contribution.

Before the acquisition, NIC had only 140,000 deposit accounts according to the CBK banking report. CBA should be in the same range without counting the mshwari accounts. The likes of ABSA have over 1.6 million accounts, Coop 3.2 million, Equity 11 million, KCB was 2.4 million in 2014 before kcb mpesa and Standard Chartered have 550,000. This shows NIC was way behind in retail banking. Gachora mentioned that the future plans for NCBA is to get into retail banking in a much bigger way so as to get more cheap deposits to widen than interest margin.
Last week they appointed a new director for retail banking to kickstart expansion plans after covid uncertainity.
If they are to get half the retail customer deposit accounts that KCB has, expand the digital lending, be mpesa custodian (Safaricom business is expanding to keep more money in mpesa through the mpesa for business, provide for the toxic NIC loans that were carried over and expand regionally (they barely have branches in Rwanda & Uganda) they need a MASSIVE capital base.
Ericsson
#242 Posted : Thursday, July 16, 2020 10:28:55 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,714
Location: NAIROBI
watesh wrote:
VituVingiSana wrote:
watesh wrote:
Ericsson wrote:
In their Notice of the Annual General Meeting on 5th July,NCBA is going on a dividend drought for 5 years.

Or they may go for a small cash dividend plus a bonus. They want to go aggressively into retail banking, they need to prop up their core capital base to keep up with the expected growth.

NIC was into retail lending.
CBA was into retail lending via Safcom.

Kenya's lending scene is very competitive. Perhaps a regional acquisition?

The KE banks that have done best regionally are DTB, I&M and Equity.
These have a decent presence in the region with subsidiaries that make a meaningful contribution.

Before the acquisition, NIC had only 140,000 deposit accounts according to the CBK banking report. CBA should be in the same range without counting the mshwari accounts. The likes of ABSA have over 1.6 million accounts, Coop 3.2 million, Equity 11 million, KCB was 2.4 million in 2014 before kcb mpesa and Standard Chartered have 550,000. This shows NIC was way behind in retail banking. Gachora mentioned that the future plans for NCBA is to get into retail banking in a much bigger way so as to get more cheap deposits to widen than interest margin.
Last week they appointed a new director for retail banking to kickstart expansion plans after covid uncertainity.
If they are to get half the retail customer deposit accounts that KCB has, expand the digital lending, be mpesa custodian (Safaricom business is expanding to keep more money in mpesa through the mpesa for business, provide for the toxic NIC loans that were carried over and expand regionally (they barely have branches in Rwanda & Uganda) they need a MASSIVE capital base.


Good analysis watesh.
Retail lending is very competitive from your analysis.
watesh
#243 Posted : Thursday, July 16, 2020 10:31:29 PM
Rank: Member


Joined: 8/10/2014
Posts: 836
Location: Kenya
Ericsson wrote:
watesh wrote:
Ericsson wrote:
In their Notice of the Annual General Meeting on 5th July,NCBA is going on a dividend drought for 5 years.

Or they may go for a small cash dividend plus a bonus. They want to go aggressively into retail banking, they need to prop up their core capital base to keep up with the expected growth.


NCBA has put brakes on its expansion plan of opening 15 new branches.
This comes after its announcement of shutting 14 branches.

For now due to the uncertainty of how much capital they need for provisions. First logical move is to close the 14 redundant branches which are too close to each other which will lead to significant savings in the short term. Once we get past our peak with covid, things will be much more predictable so easier to plan. I am confident they will soon resume the expansion plan.
VituVingiSana
#244 Posted : Thursday, July 16, 2020 10:37:40 PM
Rank: Chief


Joined: 1/3/2007
Posts: 17,171
Location: Nairobi
watesh wrote:
VituVingiSana wrote:
watesh wrote:
Ericsson wrote:
In their Notice of the Annual General Meeting on 5th July,NCBA is going on a dividend drought for 5 years.

Or they may go for a small cash dividend plus a bonus. They want to go aggressively into retail banking, they need to prop up their core capital base to keep up with the expected growth.

NIC was into retail lending.
CBA was into retail lending via Safcom.

Kenya's lending scene is very competitive. Perhaps a regional acquisition?

The KE banks that have done best regionally are DTB, I&M and Equity.
These have a decent presence in the region with subsidiaries that make a meaningful contribution.

Before the acquisition, NIC had only 140,000 deposit accounts according to the CBK banking report. CBA should be in the same range without counting the mshwari accounts. The likes of ABSA have over 1.6 million accounts, Coop 3.2 million, Equity 11 million, KCB was 2.4 million in 2014 before kcb mpesa and Standard Chartered have 550,000. This shows NIC was way behind in retail banking. Gachora mentioned that the future plans for NCBA is to get into retail banking in a much bigger way so as to get more cheap deposits to widen than interest margin.
Last week they appointed a new director for retail banking to kickstart expansion plans after covid uncertainity.
If they are to get half the retail customer deposit accounts that KCB has, expand the digital lending, be mpesa custodian (Safaricom business is expanding to keep more money in mpesa through the mpesa for business, provide for the toxic NIC loans that were carried over and expand regionally (they barely have branches in Rwanda & Uganda) they need a MASSIVE capital base.
Looks like it is time to exit NCBA. Too many irons in the fire and Gachora (NCBA) has no skin in the game unlike King James (Equity).

Gachora makes way more than JM in terms of a salary but no skin in the game.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Ericsson
#245 Posted : Thursday, July 16, 2020 10:46:38 PM
Rank: Elder


Joined: 12/4/2009
Posts: 8,714
Location: NAIROBI
watesh wrote:
VituVingiSana wrote:
watesh wrote:
Ericsson wrote:
In their Notice of the Annual General Meeting on 5th July,NCBA is going on a dividend drought for 5 years.

Or they may go for a small cash dividend plus a bonus. They want to go aggressively into retail banking, they need to prop up their core capital base to keep up with the expected growth.

NIC was into retail lending.
CBA was into retail lending via Safcom.

Kenya's lending scene is very competitive. Perhaps a regional acquisition?

The KE banks that have done best regionally are DTB, I&M and Equity.
These have a decent presence in the region with subsidiaries that make a meaningful contribution.

Before the acquisition, NIC had only 140,000 deposit accounts according to the CBK banking report. CBA should be in the same range without counting the mshwari accounts. The likes of ABSA have over 1.6 million accounts, Coop 3.2 million, Equity 11 million, KCB was 2.4 million in 2014 before kcb mpesa and Standard Chartered have 550,000. This shows NIC was way behind in retail banking. Gachora mentioned that the future plans for NCBA is to get into retail banking in a much bigger way so as to get more cheap deposits to widen than interest margin.
Last week they appointed a new director for retail banking to kickstart expansion plans after covid uncertainity.
If they are to get half the retail customer deposit accounts that KCB has, expand the digital lending, be mpesa custodian (Safaricom business is expanding to keep more money in mpesa through the mpesa for business, provide for the toxic NIC loans that were carried over and expand regionally (they barely have branches in Rwanda & Uganda) they need a MASSIVE capital base.


Probably if Bank of America makes a comeback they might give them the capital injection 💉 they require.
kmucheke
#246 Posted : Tuesday, July 28, 2020 8:32:06 AM
Rank: Member


Joined: 3/16/2019
Posts: 145
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.
heri
#247 Posted : Tuesday, July 28, 2020 8:51:42 AM
Rank: Member


Joined: 9/14/2011
Posts: 773
Location: nairobi
kmucheke wrote:
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.


The economy is in doldrums but this bank might be having its own special problems

always coming up in the news when potentially bad loans are mentioned
sparkly
#248 Posted : Tuesday, July 28, 2020 9:23:29 AM
Rank: Elder


Joined: 9/23/2009
Posts: 7,874
Location: Enk are Nyirobi
heri wrote:
kmucheke wrote:
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.


The economy is in doldrums but this bank might be having its own special problems

always coming up in the news when potentially bad loans are mentioned


1. My understanding of what happened here is that Buzeki took Landmark's money with a promise to sell land to them. They didn't sell the land because it was charged to some bank. Landmark asked for a refund. Buzeki failed to pay. Landmark went to court and obtained an order for refund. Again Buzeki failed to pay as per the order. Landmark therefore attached 53 trucks for auction.
2. Upon Landmark's attachment of the trucks, NCBA moved to court to stop the auction. Their basis was that they had lent 2.7B to Buzeki which money was used to buy the attached trucks. In other words NCBA said they have a greater right to the trucks than Landmark. A case of this nature is called an Interpleader Suit.
3. My views:
a) These kind of suits are normal for banks. Core business of banks is to take deposits, lend and secure sufficient collateral for the monies lent. This suit is just another day in business for NCBA.
b) Is Buzeki in distress? Possibly because cargo is now hauled to Nairobi by SGR hence lack of business.
c) Chances of success by NCBA in this suit are slim unless they show that the trucks were specifically charged to them or they have a priority charge over Buzeki's floating assets.
d) Is this fatal for NCBA? Unlikely if due diligence was followed to ensure sufficiency of collateral when lending out the loans and the bank followed CBK prudential guidelines. There is no mention of Buzeki having defaulted on NCBA loans. Default is however possible due to the disruption of cargo haulage from Mombasa and the ongoing Covid19 situation.
e) I want to believe that NCBA's collateral is sufficient. There is a good chance that the land to be sold was in fact charged to NCBA.
Life is short. Live passionately.
kediveKed
#249 Posted : Wednesday, July 29, 2020 8:36:10 AM
Rank: New-farer


Joined: 3/28/2016
Posts: 21
Location: nairobi
sparkly wrote:
heri wrote:
kmucheke wrote:
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.


The economy is in doldrums but this bank might be having its own special problems

always coming up in the news when potentially bad loans are mentioned


1. My understanding of what happened here is that Buzeki took Landmark's money with a promise to sell land to them. They didn't sell the land because it was charged to some bank. Landmark asked for a refund. Buzeki failed to pay. Landmark went to court and obtained an order for refund. Again Buzeki failed to pay as per the order. Landmark therefore attached 53 trucks for auction.
2. Upon Landmark's attachment of the trucks, NCBA moved to court to stop the auction. Their basis was that they had lent 2.7B to Buzeki which money was used to buy the attached trucks. In other words NCBA said they have a greater right to the trucks than Landmark. A case of this nature is called an Interpleader Suit.
3. My views:
a) These kind of suits are normal for banks. Core business of banks is to take deposits, lend and secure sufficient collateral for the monies lent. This suit is just another day in business for NCBA.
b) Is Buzeki in distress? Possibly because cargo is now hauled to Nairobi by SGR hence lack of business.
c) Chances of success by NCBA in this suit are slim unless they show that the trucks were specifically charged to them or they have a priority charge over Buzeki's floating assets.
d) Is this fatal for NCBA? Unlikely if due diligence was followed to ensure sufficiency of collateral when lending out the loans and the bank followed CBK prudential guidelines. There is no mention of Buzeki having defaulted on NCBA loans. Default is however possible due to the disruption of cargo haulage from Mombasa and the ongoing Covid19 situation.
e) I want to believe that NCBA's collateral is sufficient. There is a good chance that the land to be sold was in fact charged to NCBA.


What's not clear to me is how Buzeki would have accessed the 'deposit' for the land transaction. In most (if not all) transactions of this value, the deposit is held by the advocate of the seller [Buzeki] as stakeholders pending the delivery of completion documents upon which the deposit together with the balance of the purchase price is released to the seller (Bukezi or the bank to which he had charged the property). An advocate would ordinarily issue a professional undertaking not to release the money before the completion documents are availed or some other event. Something does not add up.
Ericsson
#250 Posted : Wednesday, July 29, 2020 8:52:53 AM
Rank: Elder


Joined: 12/4/2009
Posts: 8,714
Location: NAIROBI
kediveKed wrote:
sparkly wrote:
heri wrote:
kmucheke wrote:
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.


The economy is in doldrums but this bank might be having its own special problems

always coming up in the news when potentially bad loans are mentioned


1. My understanding of what happened here is that Buzeki took Landmark's money with a promise to sell land to them. They didn't sell the land because it was charged to some bank. Landmark asked for a refund. Buzeki failed to pay. Landmark went to court and obtained an order for refund. Again Buzeki failed to pay as per the order. Landmark therefore attached 53 trucks for auction.
2. Upon Landmark's attachment of the trucks, NCBA moved to court to stop the auction. Their basis was that they had lent 2.7B to Buzeki which money was used to buy the attached trucks. In other words NCBA said they have a greater right to the trucks than Landmark. A case of this nature is called an Interpleader Suit.
3. My views:
a) These kind of suits are normal for banks. Core business of banks is to take deposits, lend and secure sufficient collateral for the monies lent. This suit is just another day in business for NCBA.
b) Is Buzeki in distress? Possibly because cargo is now hauled to Nairobi by SGR hence lack of business.
c) Chances of success by NCBA in this suit are slim unless they show that the trucks were specifically charged to them or they have a priority charge over Buzeki's floating assets.
d) Is this fatal for NCBA? Unlikely if due diligence was followed to ensure sufficiency of collateral when lending out the loans and the bank followed CBK prudential guidelines. There is no mention of Buzeki having defaulted on NCBA loans. Default is however possible due to the disruption of cargo haulage from Mombasa and the ongoing Covid19 situation.
e) I want to believe that NCBA's collateral is sufficient. There is a good chance that the land to be sold was in fact charged to NCBA.


What's not clear to me is how Buzeki would have accessed the 'deposit' for the land transaction. In most (if not all) transactions of this value, the deposit is held by the advocate of the seller [Buzeki] as stakeholders pending the delivery of completion documents upon which the deposit together with the balance of the purchase price is released to the seller (Bukezi or the bank to which he had charged the property). An advocate would ordinarily issue a professional undertaking not to release the money before the completion documents are availed or some other event. Something does not add up.


Who is Buzeki and who owns NCBA?
There was some bending of rules
sparkly
#251 Posted : Wednesday, July 29, 2020 10:30:54 AM
Rank: Elder


Joined: 9/23/2009
Posts: 7,874
Location: Enk are Nyirobi
kediveKed wrote:
sparkly wrote:
heri wrote:
kmucheke wrote:
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.


The economy is in doldrums but this bank might be having its own special problems

always coming up in the news when potentially bad loans are mentioned


1. My understanding of what happened here is that Buzeki took Landmark's money with a promise to sell land to them. They didn't sell the land because it was charged to some bank. Landmark asked for a refund. Buzeki failed to pay. Landmark went to court and obtained an order for refund. Again Buzeki failed to pay as per the order. Landmark therefore attached 53 trucks for auction.
2. Upon Landmark's attachment of the trucks, NCBA moved to court to stop the auction. Their basis was that they had lent 2.7B to Buzeki which money was used to buy the attached trucks. In other words NCBA said they have a greater right to the trucks than Landmark. A case of this nature is called an Interpleader Suit.
3. My views:
a) These kind of suits are normal for banks. Core business of banks is to take deposits, lend and secure sufficient collateral for the monies lent. This suit is just another day in business for NCBA.
b) Is Buzeki in distress? Possibly because cargo is now hauled to Nairobi by SGR hence lack of business.
c) Chances of success by NCBA in this suit are slim unless they show that the trucks were specifically charged to them or they have a priority charge over Buzeki's floating assets.
d) Is this fatal for NCBA? Unlikely if due diligence was followed to ensure sufficiency of collateral when lending out the loans and the bank followed CBK prudential guidelines. There is no mention of Buzeki having defaulted on NCBA loans. Default is however possible due to the disruption of cargo haulage from Mombasa and the ongoing Covid19 situation.
e) I want to believe that NCBA's collateral is sufficient. There is a good chance that the land to be sold was in fact charged to NCBA.


What's not clear to me is how Buzeki would have accessed the 'deposit' for the land transaction. In most (if not all) transactions of this value, the deposit is held by the advocate of the seller [Buzeki] as stakeholders pending the delivery of completion documents upon which the deposit together with the balance of the purchase price is released to the seller (Bukezi or the bank to which he had charged the property). An advocate would ordinarily issue a professional undertaking not to release the money before the completion documents are availed or some other event. Something does not add up.


Deposit is usually paid to the seller upon signing the contract of sale. The standard deposit is usually 10% but in this case a deposit of 30% was paid.
Life is short. Live passionately.
kediveKed
#252 Posted : Thursday, July 30, 2020 1:40:06 PM
Rank: New-farer


Joined: 3/28/2016
Posts: 21
Location: nairobi
sparkly wrote:
kediveKed wrote:
sparkly wrote:
heri wrote:
kmucheke wrote:
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.


The economy is in doldrums but this bank might be having its own special problems

always coming up in the news when potentially bad loans are mentioned


1. My understanding of what happened here is that Buzeki took Landmark's money with a promise to sell land to them. They didn't sell the land because it was charged to some bank. Landmark asked for a refund. Buzeki failed to pay. Landmark went to court and obtained an order for refund. Again Buzeki failed to pay as per the order. Landmark therefore attached 53 trucks for auction.
2. Upon Landmark's attachment of the trucks, NCBA moved to court to stop the auction. Their basis was that they had lent 2.7B to Buzeki which money was used to buy the attached trucks. In other words NCBA said they have a greater right to the trucks than Landmark. A case of this nature is called an Interpleader Suit.
3. My views:
a) These kind of suits are normal for banks. Core business of banks is to take deposits, lend and secure sufficient collateral for the monies lent. This suit is just another day in business for NCBA.
b) Is Buzeki in distress? Possibly because cargo is now hauled to Nairobi by SGR hence lack of business.
c) Chances of success by NCBA in this suit are slim unless they show that the trucks were specifically charged to them or they have a priority charge over Buzeki's floating assets.
d) Is this fatal for NCBA? Unlikely if due diligence was followed to ensure sufficiency of collateral when lending out the loans and the bank followed CBK prudential guidelines. There is no mention of Buzeki having defaulted on NCBA loans. Default is however possible due to the disruption of cargo haulage from Mombasa and the ongoing Covid19 situation.
e) I want to believe that NCBA's collateral is sufficient. There is a good chance that the land to be sold was in fact charged to NCBA.


What's not clear to me is how Buzeki would have accessed the 'deposit' for the land transaction. In most (if not all) transactions of this value, the deposit is held by the advocate of the seller [Buzeki] as stakeholders pending the delivery of completion documents upon which the deposit together with the balance of the purchase price is released to the seller (Bukezi or the bank to which he had charged the property). An advocate would ordinarily issue a professional undertaking not to release the money before the completion documents are availed or some other event. Something does not add up.


Deposit is usually paid to the seller upon signing the contract of sale. The standard deposit is usually 10% but in this case a deposit of 30% was paid.


I respectfully disagree. Now these kinds of deals, the deposit is paid to the sellor's advocate which is held as stakeholders. The Sellor's advocate cannot release the deposit or the balance of the purchase price unless the seller has complied with all its obligation most importantly which is the delivery of completion documents (where by its an exchange of money and documents that vest ownership i.e a transfer title deed etc).

The LSK conditions of Sale which are incorporated into most sale agreements with a few exceptions provide that the purchase price (which consists of the deposit and the balance of the purchase price) can only be released upon the registration of the transfer in favour of the buyer.

These rules were made to protect buyers from situations where the buyer pays a deposit and later the seller changes his mind to the detriment of the purchaser. Therefore, you will see why something is not making sense in this transaction.
sparkly
#253 Posted : Thursday, July 30, 2020 6:35:22 PM
Rank: Elder


Joined: 9/23/2009
Posts: 7,874
Location: Enk are Nyirobi
kediveKed wrote:
sparkly wrote:
kediveKed wrote:
sparkly wrote:
heri wrote:
kmucheke wrote:
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.


The economy is in doldrums but this bank might be having its own special problems

always coming up in the news when potentially bad loans are mentioned


1. My understanding of what happened here is that Buzeki took Landmark's money with a promise to sell land to them. They didn't sell the land because it was charged to some bank. Landmark asked for a refund. Buzeki failed to pay. Landmark went to court and obtained an order for refund. Again Buzeki failed to pay as per the order. Landmark therefore attached 53 trucks for auction.
2. Upon Landmark's attachment of the trucks, NCBA moved to court to stop the auction. Their basis was that they had lent 2.7B to Buzeki which money was used to buy the attached trucks. In other words NCBA said they have a greater right to the trucks than Landmark. A case of this nature is called an Interpleader Suit.
3. My views:
a) These kind of suits are normal for banks. Core business of banks is to take deposits, lend and secure sufficient collateral for the monies lent. This suit is just another day in business for NCBA.
b) Is Buzeki in distress? Possibly because cargo is now hauled to Nairobi by SGR hence lack of business.
c) Chances of success by NCBA in this suit are slim unless they show that the trucks were specifically charged to them or they have a priority charge over Buzeki's floating assets.
d) Is this fatal for NCBA? Unlikely if due diligence was followed to ensure sufficiency of collateral when lending out the loans and the bank followed CBK prudential guidelines. There is no mention of Buzeki having defaulted on NCBA loans. Default is however possible due to the disruption of cargo haulage from Mombasa and the ongoing Covid19 situation.
e) I want to believe that NCBA's collateral is sufficient. There is a good chance that the land to be sold was in fact charged to NCBA.


What's not clear to me is how Buzeki would have accessed the 'deposit' for the land transaction. In most (if not all) transactions of this value, the deposit is held by the advocate of the seller [Buzeki] as stakeholders pending the delivery of completion documents upon which the deposit together with the balance of the purchase price is released to the seller (Bukezi or the bank to which he had charged the property). An advocate would ordinarily issue a professional undertaking not to release the money before the completion documents are availed or some other event. Something does not add up.


Deposit is usually paid to the seller upon signing the contract of sale. The standard deposit is usually 10% but in this case a deposit of 30% was paid.


I respectfully disagree. Now these kinds of deals, the deposit is paid to the sellor's advocate which is held as stakeholders. The Sellor's advocate cannot release the deposit or the balance of the purchase price unless the seller has complied with all its obligation most importantly which is the delivery of completion documents (where by its an exchange of money and documents that vest ownership i.e a transfer title deed etc).

The LSK conditions of Sale which are incorporated into most sale agreements with a few exceptions provide that the purchase price (which consists of the deposit and the balance of the purchase price) can only be released upon the registration of the transfer in favour of the buyer.

These rules were made to protect buyers from situations where the buyer pays a deposit and later the seller changes his mind to the detriment of the purchaser. Therefore, you will see why something is not making sense in this transaction.


What you say is correct. However, land transactions in Kenya usually take longer than the expected 90 days. It is not uncommon for the deposit to be released to the vendor, with consent of the purchaser. For big amounts like this one, I agree that the parties should have been more diligent.
Life is short. Live passionately.
mkenyan
#254 Posted : Friday, July 31, 2020 7:12:36 PM
Rank: Veteran


Joined: 4/1/2009
Posts: 1,836
sparkly wrote:
kediveKed wrote:
sparkly wrote:
kediveKed wrote:
sparkly wrote:
heri wrote:
kmucheke wrote:
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.


The economy is in doldrums but this bank might be having its own special problems

always coming up in the news when potentially bad loans are mentioned


1. My understanding of what happened here is that Buzeki took Landmark's money with a promise to sell land to them. They didn't sell the land because it was charged to some bank. Landmark asked for a refund. Buzeki failed to pay. Landmark went to court and obtained an order for refund. Again Buzeki failed to pay as per the order. Landmark therefore attached 53 trucks for auction.
2. Upon Landmark's attachment of the trucks, NCBA moved to court to stop the auction. Their basis was that they had lent 2.7B to Buzeki which money was used to buy the attached trucks. In other words NCBA said they have a greater right to the trucks than Landmark. A case of this nature is called an Interpleader Suit.
3. My views:
a) These kind of suits are normal for banks. Core business of banks is to take deposits, lend and secure sufficient collateral for the monies lent. This suit is just another day in business for NCBA.
b) Is Buzeki in distress? Possibly because cargo is now hauled to Nairobi by SGR hence lack of business.
c) Chances of success by NCBA in this suit are slim unless they show that the trucks were specifically charged to them or they have a priority charge over Buzeki's floating assets.
d) Is this fatal for NCBA? Unlikely if due diligence was followed to ensure sufficiency of collateral when lending out the loans and the bank followed CBK prudential guidelines. There is no mention of Buzeki having defaulted on NCBA loans. Default is however possible due to the disruption of cargo haulage from Mombasa and the ongoing Covid19 situation.
e) I want to believe that NCBA's collateral is sufficient. There is a good chance that the land to be sold was in fact charged to NCBA.


What's not clear to me is how Buzeki would have accessed the 'deposit' for the land transaction. In most (if not all) transactions of this value, the deposit is held by the advocate of the seller [Buzeki] as stakeholders pending the delivery of completion documents upon which the deposit together with the balance of the purchase price is released to the seller (Bukezi or the bank to which he had charged the property). An advocate would ordinarily issue a professional undertaking not to release the money before the completion documents are availed or some other event. Something does not add up.


Deposit is usually paid to the seller upon signing the contract of sale. The standard deposit is usually 10% but in this case a deposit of 30% was paid.


I respectfully disagree. Now these kinds of deals, the deposit is paid to the sellor's advocate which is held as stakeholders. The Sellor's advocate cannot release the deposit or the balance of the purchase price unless the seller has complied with all its obligation most importantly which is the delivery of completion documents (where by its an exchange of money and documents that vest ownership i.e a transfer title deed etc).

The LSK conditions of Sale which are incorporated into most sale agreements with a few exceptions provide that the purchase price (which consists of the deposit and the balance of the purchase price) can only be released upon the registration of the transfer in favour of the buyer.

These rules were made to protect buyers from situations where the buyer pays a deposit and later the seller changes his mind to the detriment of the purchaser. Therefore, you will see why something is not making sense in this transaction.


What you say is correct. However, land transactions in Kenya usually take longer than the expected 90 days. It is not uncommon for the deposit to be released to the vendor, with consent of the purchaser. For big amounts like this one, I agree that the parties should have been more diligent.

land transactions usually don't take longer than 90 days (assuming the parties have all the documents and money) unless you have an incompetent lawyer.
sparkly
#255 Posted : Friday, July 31, 2020 10:19:21 PM
Rank: Elder


Joined: 9/23/2009
Posts: 7,874
Location: Enk are Nyirobi
mkenyan wrote:
sparkly wrote:
kediveKed wrote:
sparkly wrote:
kediveKed wrote:
sparkly wrote:
heri wrote:
kmucheke wrote:
Security for 2.7B NCBA loan to Buzeki in danger.

Quote:
Buzeki Enterprises, a transport firm linked with businessman-cum-politician Zedekiah Bundotich Kiprop, owes the country’s third largest bank by assets, NCBA some Sh2.7billion, adding to the debt pile that has left creditors fighting for the Mombasa-based company’s trucks and trailers.

The High Court last year allowed Landmark to auction the vehicles to recover Sh118 million after Buzeki defaulted on a debt repayment agreement signed in November 2018.

NCBA, however, appealed the High Court decision saying it had a stake in the financing of Buzeki’s 53 trucks and trailers hence their sale by Landmark would dilute the security of the loan owed by the haulage firm.

“If the properties are sold, and the bank succeeds in its appeal, the appeal may be rendered nugatory as the bank will have already lost the securities for the amount loaned to Buzeki,”

The court said the 53 trucks and trailers shall remain under attachment but shall not be sold.

They also directed NCBA to deposit Sh60 million in an interest-earning account within 30 days, failing which Landmark will be free to sell the trucks and trailers.


The economy is in doldrums but this bank might be having its own special problems

always coming up in the news when potentially bad loans are mentioned


1. My understanding of what happened here is that Buzeki took Landmark's money with a promise to sell land to them. They didn't sell the land because it was charged to some bank. Landmark asked for a refund. Buzeki failed to pay. Landmark went to court and obtained an order for refund. Again Buzeki failed to pay as per the order. Landmark therefore attached 53 trucks for auction.
2. Upon Landmark's attachment of the trucks, NCBA moved to court to stop the auction. Their basis was that they had lent 2.7B to Buzeki which money was used to buy the attached trucks. In other words NCBA said they have a greater right to the trucks than Landmark. A case of this nature is called an Interpleader Suit.
3. My views:
a) These kind of suits are normal for banks. Core business of banks is to take deposits, lend and secure sufficient collateral for the monies lent. This suit is just another day in business for NCBA.
b) Is Buzeki in distress? Possibly because cargo is now hauled to Nairobi by SGR hence lack of business.
c) Chances of success by NCBA in this suit are slim unless they show that the trucks were specifically charged to them or they have a priority charge over Buzeki's floating assets.
d) Is this fatal for NCBA? Unlikely if due diligence was followed to ensure sufficiency of collateral when lending out the loans and the bank followed CBK prudential guidelines. There is no mention of Buzeki having defaulted on NCBA loans. Default is however possible due to the disruption of cargo haulage from Mombasa and the ongoing Covid19 situation.
e) I want to believe that NCBA's collateral is sufficient. There is a good chance that the land to be sold was in fact charged to NCBA.


What's not clear to me is how Buzeki would have accessed the 'deposit' for the land transaction. In most (if not all) transactions of this value, the deposit is held by the advocate of the seller [Buzeki] as stakeholders pending the delivery of completion documents upon which the deposit together with the balance of the purchase price is released to the seller (Bukezi or the bank to which he had charged the property). An advocate would ordinarily issue a professional undertaking not to release the money before the completion documents are availed or some other event. Something does not add up.


Deposit is usually paid to the seller upon signing the contract of sale. The standard deposit is usually 10% but in this case a deposit of 30% was paid.


I respectfully disagree. Now these kinds of deals, the deposit is paid to the sellor's advocate which is held as stakeholders. The Sellor's advocate cannot release the deposit or the balance of the purchase price unless the seller has complied with all its obligation most importantly which is the delivery of completion documents (where by its an exchange of money and documents that vest ownership i.e a transfer title deed etc).

The LSK conditions of Sale which are incorporated into most sale agreements with a few exceptions provide that the purchase price (which consists of the deposit and the balance of the purchase price) can only be released upon the registration of the transfer in favour of the buyer.

These rules were made to protect buyers from situations where the buyer pays a deposit and later the seller changes his mind to the detriment of the purchaser. Therefore, you will see why something is not making sense in this transaction.


What you say is correct. However, land transactions in Kenya usually take longer than the expected 90 days. It is not uncommon for the deposit to be released to the vendor, with consent of the purchaser. For big amounts like this one, I agree that the parties should have been more diligent.

land transactions usually don't take longer than 90 days (assuming the parties have all the documents and money) unless you have an incompetent lawyer.


You have no idea.
Life is short. Live passionately.
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