Four Banks to Help Investors Cash Safaricom Refund Cheques

Posted 20 June 2008 @ 07:14 am EET     Print     Reprint     E-Mail     Comments

Nairobi (IBTimes.com) - Investors who applied for minimum shares in the just concluded Safaricom Initial Public Offering can from today exchange their refund cheques for cash at any of the four banks that received the funds.

The four are Citibank, Equity Bank, National Bank and Kenya Post Office Savings Bank (PostBank).


A joint statement from the Central Bank and the Capital Markets Authority (CMA) said the receiving banks had been instructed to pay cash for refunds of up to Sh10,000.

"We have instructed the lead receiving bank, Citibank to make arrangements to encash instruments up to Sh10, 000 at their branches subject to proper identification," the Central Bank Governor Njuguna Ndung'u and acting chief executive officer of CMA Stella Kilonzo said in a statement.

This means that those who applied for shares worth up to Sh12,500 can access their money over the counter from the receiving banks. The capping is based on the allocation criteria that awarded everyone 21 per cent of what they applied for.

The move by the two regulators saves retail investors the agony of waiting for weeks for their cheques to be cleared.

Yesterday, the four receiving banks are said to have held a day-long meeting to find ways of making the process fraud proof.

The move comes hot on the heels of Central Bank's warning over the delay in payment of the refunds to investors and its impact on the financial markets.

The two regulators on Monday raised concerns over the delays in processing the refund cheques, and third party endorsement of cheques.

To jump this hurdle, banks and stockbrokers later teamed up to force investors to open new bank accounts with them for purposes of clearing the cheques.

"Investors should not be forced to open accounts with any particular commercial bank. It is the right of the investor to collect his or her cheque from an investment bank or stock broker," said the statement.

CBK and the CMA said they had learnt some lessons from processing East Africa's largest IPO which would help improve the banking and the IPO system.

The CBK said that it will work with the Kenya Bankers Association (KBA) to ensure that customers are adequately educated on electronic payment methods.

The CMA, regulator of the capital markets also noted some control measures such as; enhancing the legal framework to facilitate international practices in IPO, encourage investors to buy shares through collective investment schemes and strengthen the internal system of brokers to facilitate the IPO process

Questions for all quarters have arisen as to why the Electronic Funds Transfer (EFT), where a shareholder would receive his or her refund directly in their account instead of a cheque, was not effectively processed for the investors.

Some brokers said due to the sheer numbers of applications they could not forward the EFT details. Other attempted explanations included missing or inaccurate account details.