Kenya Post Office Savings Bank (Postbank) is yet to find a buyer for its multi-billion shilling developed commercial block in Muthaiga, Nairobi, more than a year after it put the property on sale.
The State-owned savings bank, which has for years been eyeing entry into the relatively lucrative commercial lending space, has re-advertised the tender inviting prospective buyers of Postbank Training Centre.
The property comprises buildings, a water reservoir, a swimming pool and other developments, sitting on 15.45 acres along Coffee Garden Road, off Kiambu Road in Muthaiga North.
The loss-making Postbank may book approximately Sh2.29 billion from the sale of land alone without the developments on it, going by the average market value of Sh148.5 million per acre in Muthaiga, taking into account latest quarterly property price surveys by HassConsult.
The average value of land in Muthaiga has gone up by Sh9.2 million, or 6.6 percent, from Sh139.3 million per acre when it first sought buyers for the property in December 2017.
“The parcel of land is being offered for sale on “as is, where is” basis and the bank makes no representation and gives no warranty whatsoever to the adequacy of services, soil conditions, land use, absence or presence of environmental contamination, or state of the development of the subject land for any intended use of the purchaser,” the bank said in the notice.
The struggling bank’s plan to venture into issuance of loans has largely been hampered by lack of fresh capital investment which is crucial before applying for the licence from the Central Bank of Kenya (CBK).
Withholding tax
Unlike other banks that are regulated by the CBK, the 104-branch Postbank is governed by the Kenya Post Office Savings Bank Act.
Interest earned by its depositors is exempted from 15 percent withholding tax.
The bank has since 2013 made clear its plan to operate a new commercial banking subsidiary or launch a deposit-taking microfinance institution.
This will require approval from the CBK after fulfilment of stringent requirements, including fresh capital injection.
An institution must maintain at least Sh1 billion core capital to operate as a commercial bank and between Sh20 million and Sh60 million as a microfinancier depending on the scale of its operations.
The CBK rules do not also allow a commercial lender to hold more than 20 percent of its capital in real property (buildings and land).