ORIENT Bank is to restructure its shareholding to comply with Bank of Ugandaâ€™s regulatory requirement before the 2011 deadline.
Mark Horwood, the Orient executive director, said in an interview that since 2004, they had been holding discussions with investors and no deal had been concluded yet.
â€œThe bank has been talking to a number of investors. We have options that include listing on the stock exchange, a merger or acquisition,â€ he said.
However, sources say a deal has been concluded with a Nigerian financial institution, Bank PHB Plc. to take a majority stake in Orient Bank.
â€œI cannot comment on who these investors are. We are required to dilute shareholding in line with the Financial Institutions Statute,â€ Horwood said.
Ketan Morjaria, the bankâ€™s vice-chairman, owns majority shares (49%). Other shareholders include Rajni Karia, a director and Jay Karia, also a director.
The Financial Institutions Statute (FIS) was revised to include provisions that limit over-concentration of ownership of commercial banks to individuals.
According to the Financial Institutions (Ownership and Control) regulations, 2005 under the FIS Act, â€œRules were introduced to prevent dominant shareholders of financial institutions from exerting undue influence on management of the institutions that may impede continuing fulfillment of criteria for licensing.â€
An individual or body corporate owned by one individual other than a reputable financial institution or reputable public company approved by the central bank shall not directly or indirectly own or acquire more than 49% of shares in a financial institution.
According to the central bank, the rationale for regulations is that shareholding in financial institutions should be diversified among many individuals to achieve a system of checks and balances.
â€œShareholding can be a source of weakness in the corporate governance of institutions as shown in most bank failures,â€ the statute reads in part.
Orient Bank changing shareholders