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guru267		#21 Posted : Thursday, February 25, 2010 9:37:28 AM
Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi		@wa_ithaka no need to call anyone SLOW... first of all i'm not @VVS and secondly i know NIC needs capital but a rights issue wouldnt work because shareholders would not take up those rights and they wouldnt even approve it... since they already had one 2 years ago.. NIC knows this and thats why they were INTELLIGENT enough not to do it... Mark 12:29 Deuteronomy 4:16
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sparkly		#22 Posted : Thursday, February 25, 2010 9:44:02 AM
Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi		Gordon Gekko wrote: @vvs, loan provisions are taxable only if they are specific provisions... i think you mean't to say 'not taxable' or 'tax deductible'. @gathinga CBK prudential guidelines require banks to make a minimum general provision of 1% of total loans. A further general provision of 3% is made for accounts on the 'watch list' ie high probability of default. This explains your observation. It also shows that EB has many accounts on the 'watch list' Life is short. Live passionately.
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Wa_ithaka		#23 Posted : Thursday, February 25, 2010 10:01:37 AM
Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi		guru267- i guess we got 2 slow ones today. Its nothing to do with whether shareholders want to take rights issue or not. NIC will need to raise its capital this yr or next. Btw, in case you were unaware, several UK/US banks (ever heard of Lloyds TSB?) have done 2 huge rights issue in the last 18months. As a shareholder, you either get dimunation of your stake's value or you take up your rights. PS-an investor has to be able to look through the noise and pick out the fundamentals The Governor of Nyeri - 2017
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Gordon Gekko		#24 Posted : Thursday, February 25, 2010 10:19:52 AM
Rank: Elder Joined: 5/27/2008 Posts: 3,760		@sparkly, thanks for the correection. Hi kizungu ina wenyewe......
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VituVingiSana		#25 Posted : Thursday, February 25, 2010 12:16:59 PM
Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi		Gordon Gekko wrote: @vvs, loan provisions are taxable only if they are specific provisions. General provisions, which I suspect these are, are not tax deductable. Also, when soecific provisions are finally recovered, the tax earlier relieved becomes payable. General Provisions (1% of all loans) are incremental (based on loans adjusted for risk) over prior periods. The details in Annual Reports provides that information but most of the increase in Specific Provisions are what drives the LLPs for most banks. Equity might be the exception where Loan Growth has been very impressive! Greedy when others are fearful. Very fearful when others are greedy - *to paraphrase Warren Buffett*
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VituVingiSana		#26 Posted : Thursday, February 25, 2010 12:20:32 PM
Rank: Chief Joined: 1/3/2007 Posts: 18,349 Location: Nairobi		Wa_ithaka wrote: Vvs-are u especially slow? Please re-re-read my first comment on NIC Posted: Wednesday, February 24, 2010 5:05:26 PM. I said NIC needs capital. hence a rights issue is better than a bonus. Wow... if I am slow... I have no idea about you... So, I ask again... What (significant) difference does it make to their capital structure that NIC gave a bonus? Greedy when others are fearful. Very fearful when others are greedy - *to paraphrase Warren Buffett*
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Wa_ithaka		#27 Posted : Thursday, February 25, 2010 1:41:59 PM
Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi		Last shot at this. NIC will need to increase its capital. Potentially, the cheapest way for it would have been to do a rights issue which would increase number of shares but also raise capital. A bonus share issue just increases the number of shares in issue but has no capital impact. A stupid move. Well looks like a duck, quacks a like... The Governor of Nyeri - 2017
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Scubidu		#28 Posted : Thursday, February 25, 2010 2:20:32 PM
Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi		@Wa_ithaka. As I recall a bonus issue is often referred to as a stock dividend, an alternative to the cash dividend and necessary to reward investors or re-distribute (sometimes unproductive) reserves. Last time NIC used their share premium reserve for the bonus issue. There's no correlation between a bonus issue and a rights issue, they are meant to achieve different functions, so how can you claim it's stupid? As vvs has said there's no material effect on the capital structure...you should be making the case as to why it was stupid as compared to paying a dividend in cash. Rights issue can still go ahead with greater leeway on the discount price. “We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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sparkly		#29 Posted : Thursday, February 25, 2010 4:09:08 PM
Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi		Wa_ithaka wrote: Last shot at this. NIC will need to increase its capital. Potentially, the cheapest way for it would have been to do a rights issue which would increase number of shares but also raise capital. A bonus share issue just increases the number of shares in issue but has no capital impact. A stupid move. Well looks like a duck, quacks a like... @wa-ithaka i beg to differ. Issuing a bonus has a capital implication. During a bonus issue the company capitalises the profit reserves hence issuing fully paid shares on the profit reserves! If this doesn't increase capital, then i must also be slow. On issuing rights, the amount of cash raised in a rights issue depends on the price of shares and uptake from shareholders. If nic were to issue rights now, the issue would have to be less than the market price of 35. If the share rises to 50, it can issue rights at close to sh 50. Its logical to issue rights when the market is high. Life is short. Live passionately.
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Wa_ithaka		#30 Posted : Thursday, February 25, 2010 4:41:48 PM
Rank: Veteran Joined: 1/7/2010 Posts: 1,279 Location: nbi		Sparkly-when i read your response, I almost (almost) shed a tear. This is in a nutshell is why we Kenyans get so easily conned. VVS can you help sparkly understand the difference between a bonus and a rights issue and the impact they both have on capital. Thanks Hint-a bank's capital=shareholder funds + retained earnings. Plus preferred shares where allowable... The Governor of Nyeri - 2017
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