Ericsson wrote:kmucheke wrote:CBK to determine bank dividend payouts in new rulesQuote:Some of the best capitalised and most consistent payers of dividends including KCB, Standard Chartered Bank Kenya and Absa Bank Kenya, have already skipped interim payouts for the half year ended June as their earnings contracted by double digits. A CEO of one of the lenders told Business Daily that dividend droughts is the new normal, at least in the short-term.
I don't believe that story by business daily.
Which bank has CBK bailed out?
Such measures have been put in Europe and America where commercial banks were bailed out by the respective central banks during times of distress.
Argument was after being given cheap money they then go and give it to shareholders which was irresponsible.
For Kenya this is complex and complicated.
It is peculiar to different countries
What applies to Uganda or SA may not be applicable to East African Financial hub (Kenya).
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There are many powerful interests involved beyond CBK .Here is just a few. I believe GOK is in dire need of funds
- Loss of direct income to govt eg KCB
dividend that is huge.
- Indirect income to govt thru KRA taxes
on dividends , this is also huge.
- Loss of income to organized local institutional investors eg 15 million members of coop movements
- Loss of income to institutional majority shareholders as they expect dividend income from subsidiaries in a profitable year eg Stanbic SA, Standard Chartered Bank Uk, Absa SA. This will send a wrong signal to institutional big ticket majority owners of foreign banks .
I believe for Kenya dividends can be reduced as per payout ratio relative to the net earnings but cannot be denied .
For indigenous full blown Kenyan banks with no GOK , institutional or foreign interest then anything can happen. Examples are NCBA, Equity bank etc.
The wazua spirit as members is to educate and inform and learn from others within the limit of what we know in any chosen area irrespective of our differences in tribes, nationalities, etc. .