City Trust LTD Circular To Shareholders

CITY TRUST LIMITED
(Incorporated in the Republic of Kenya under the Companies Act

(Chapter 486 of the Laws of Kenya), Registration Number C 7/50)
CIRCULAR TO SHAREHOLDERS
IN RELATION TO:
PROPOSAL FOR ISSUE OF UP TO 363,722,034 NEW ORDINARY SHARES IN CONNECTION WITH THE
ACQUISITION OF THOSE SHARES OF I&M BANK LIMITED (I&M) NOT ALREADY OWNED BY CITY
TRUST LIMITED (CTL) A PUBLIC LIMITED COMPANY LISTED ON THE NAIROBI SECURITIES
EXCHANGE, BY MEANS OF A SHARE EXCHANGE OFFER
ADVISED BY:
INDEPENDENT ADVISER
LEGAL ADVISER
AUDITORS
THIS CIRCULAR IS DATED JANUARY 21, 2013
City Trust Limited
Shareholders Circular
__________________________________________________________________________________________________________________________________________________________________
IMPORTANT NOTICE
THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
If you are in any doubt about this offer, you should consult the independent
adviser appointed by your Board of Directors, or your investment banker,
stockbroker or other professional investment adviser.
If you have sold or transferred all of your ordinary shares in City Trust Limited (CTL),
please forward this document (and the enclosed Notice and Proxy Form) immediately to the
investment adviser, stockbroker, banker or agent through whom the sale was effected for
transmission to the purchaser or transferee of the shares.
If you are currently a shareholder and are unable to attend the extraordinary general
meeting (EGM) on February 20, 2013, please complete and return the attached Proxy
Form in accordance with the instructions thereon and send it to the registered office of CTL,
Deloitte Place, Waiyaki Way, Muthangari, Nairobi.
This Circular is issued pursuant to the requirements of The Capital Markets Act (Chapter
485A), The Capital Markets (Securities) (Public Offers, Listing and Disclosures) Regulations,
2002 and The Capital Markets (Take-overs and Mergers Regulations), 2002 and relates to
the proposed offer by CTL to acquire those Shares of I&M Bank of Kshs. 100/= each which
are not already owned by CTL.
Approval has been obtained from the Capital Markets Authority (CMA) in respect of the
compliance of this Circular with the Capital Markets Act and applicable regulations. As a
matter of policy, the CMA assumes no responsibility for the correctness of any statements or
opinions made or reports contained in this Circular. Approval of the Circular by the CMA is
not to be taken as an indication of the merits of the Offer or as a recommendation by the
Authority to the shareholders of CTL.
The Nairobi Securities Exchange (NSE) has given its approval for the listing of all the New
Shares (hereinafter defined) on the Main Investment Market Segment (MIMS) of the NSE.
The NSE assumes no responsibility for the correctness of any of the statements made or
opinions or reports contained in this Circular. Approval of the Circular by the NSE is not to
be taken as an indication of the merits of the transaction or as a recommendation by the
NSE to the shareholders of CTL.
A Notice of an Extraordinary General Meeting of City Trust Limited which is to be held at
10:00a.m. on Wednesday February 20, 2013 at Deloitte Place, Waiyaki Way is set
out at the end of this document. A form of proxy for use by shareholders is also enclosed.
Dated: January 21, 2013
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City Trust Limited
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Table of Contents
Important Notice ................................................................................................................................................. 2
Part I General ................................................................................................................................................... 4
1.
Timetable Of Key Events .................................................................................................................... 4
2.
Transaction Advisers ........................................................................................................................... 5
3.
Definitions ............................................................................................................................................ 6
Part II Chairmans Letter ................................................................................................................................ 9

1.
Introduction ......................................................................................................................................... 9
2.
Acquisition Of Shares In I&M Bank Limited..................................................................................... 9
3.
Rationale For Undertaking This Acquisition ................................................................................... 10
4.
Effect Of The Transaction On The Existing Shareholders And The Companys Financial
Position ............................................................................................................................................... 11
5.
Principal Terms Of The Acquisition ................................................................................................. 12
6.
Proposed Share Split ......................................................................................................................... 14
7.
Statutory Approvals & Related Information .................................................................................. 14
8.
Extraordinary General Meeting (Egm) ............................................................................................ 15
9.
Recommendations And Voting Intentions ..................................................................................... 15
Part III I&M Bank Limited............................................................................................................................. 16

Part IV Impact Of The Transaction ............................................................................................................. 30
Part V Proposed Changes In Board Structure And Profiles Of Proposed Board Of Directors ............ 34
Part VI Proposed Amendments To Memorandum & Articles Of Association ......................................... 36
Part VII Risk Factors ...................................................................................................................................... 38
Part VIII Statutory And General Information ............................................................................................. 43
Part IX EGM Notice ........................................................................................................................................ 48
Part X Appendices .......................................................................................................................................... 51
1.
Independent Opinion on the Share Exchange Offer .................................................................... 51
2.
Directors Declaration ....................................................................................................................... 60
3.
Statement from Auditors .................................................................................................................. 61
4.
The OTC Market Prices for I&M Bank Shares ............................................................................... 62
5.
Notes ................................................................................................................................................... 63
6.
Proxy Form ......................................................................................................................................... 64
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City Trust Limited
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PART I GENERAL
1. TIMETABLE OF KEY EVENTS
Latest time to return proxy forms for the EGM
10:00 a.m. on Monday, February

18, 2013
EGM
10:00 a.m. on Wednesday,

February 20, 2013
Press Announcement of outcome of EGM
Thursday, February 21, 2013
Procedure below is dependent on the approval of the transaction by CTL

shareholders:
Proposed Date of suspension on trading of CTL shares
Tuesday, March 5, 2013
Proposed Opening Date for the Offer for I&M Bank Tuesday, March 5, 2013
Shareholders
Proposed Closing Date for the Offer
Friday, April 19, 2013
Proposed Date to lift suspension on trading of CTL Friday, April 19, 2013
shares
Press Announcement of the outcome of the Offer
Friday April 26, 2013
Proposed Register Closing Date for the share split
Tuesday, May 28, 2013
Conclusion of mandatory acquisition of any shares held Monday, June 3, 2013

by dissenting I&M shareholders
Proposed date for the change of name to I&M Holdings Friday, June 7, 2013
Limited
Date for Admission of New Shares to Listing & Trading Tuesday, June 11, 2013
Date for the share split
* Dates above could change subject to the approvals of shareholders and the CMA, as well as the
date of publication in the Kenya Gazette of the exemption granted to CTL under Section 53 of the
Banking Act. Any changes will be announced.
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City Trust Limited
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2. TRANSACTION ADVISERS
Independent Adviser
Dyer and Blair Investment Bank
10th Floor, Pension Towers,
Loita Street
P.O Box 45396, 00100
Nairobi
Legal Adviser
Kaplan & Stratton
9th Floor, Williamson House
4th Ngong Avenue
P.O Box 40111, 00100
Nairobi
Name/Title
Paul Orem
Chief Executive Officer
porem@dyerandblair.com
Leah Nyambura
Corporate Finance Analyst
leah@dyerandblair.com
Name/Title
Oliver Fowler
Partner
ofowler@kapstrat.com
Amar Grewal-Thethy
Partner
athethy@kapstrat.com
Auditors
Deloitte & Touche,
Certified Public Accountants
Deloitte Place,
Waiyaki Way, Muthangari,
P.O Box 40092, 00100,
Name/Title
Anne Muraya
Partner
amuraya@deloitte.co.ke
Nairobi
Fred Aloo
Partner
faloo@deloitte.co.ke
Office Contact
020 324 0108
020 324 0122
Office Contact
020 2841000
020 2841000
Office Contact
020 4230000
020 4230000
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City Trust Limited
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3. DEFINITIONS
In this Circular, its annexure and enclosures, unless otherwise stated, the words in the first
column have the meaning stated opposite them in the second column, words in the singular
include the plural and vice versa, words signifying one gender include the other gender and
references to a person include references to juristic persons and associations of persons:
"Acquisition"
The proposed acquisition of shares in I&M Bank not presently

held by CTL pursuant to the Offer.
AIMS
The Alternative Investment Market Segment of the Nairobi

Securities Exchange.
Bank One
Bank One Limited, a company incorporated in the Republic of

Mauritius, company number 40612, and licensed by the BOM as
a commercial bank.
Banking Act
Banking Act (Chapter 488 of the Laws of Kenya).
Banks Shareholders
The holders of the issued share capital of I&M Bank other than
CTL.
BCR
Banque Commerciale du Rwanda Limited, a company

incorporated in the Republic of Rwanda, company number R.C.
A010/Klg, and licensed by the BNR as a commercial bank.
BNR
The National Bank of Rwanda, the Central Bank of Rwanda.
Board or Directors
The board of directors of either CTL or I&M Bank as indicated.
BOM
The Bank of Mauritius, the Central Bank of Mauritius.
BOT
The Bank of Tanzania, the Central Bank of Tanzania.
CIL
Ciel Investment Limited, Mauritius.
Circular
This Circular dated January 21, 2013, together with its

Appendices and the enclosed Notice of EGM and Proxy Form.
CMA
The Capital Markets Authority of Kenya, a statutory regulatory

authority established under the Capital Markets Act.
Capital Markets Act
The Capital Markets Act (Chapter 485A of the Laws of Kenya).
Central Bank of
Kenya or CBK
The Central Bank of Kenya, a statutory corporation established

under the Central Bank of Kenya Act (Chapter 491 of the Laws
of Kenya).
CEO
Chief Executive Officer.

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City Trust Limited
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Companies Act
The Companies Act (Chapter 486 of the Laws of Kenya).
CTL or City Trust or City Trust Limited, a company incorporated under the
Company
Companies Act (No. 7/50) and listed on the Nairobi Securities
Exchange.
DEG
DEG - Deutsche Investitions Und Entwicklungsgesellschaft mbH,

registered in the Republic of Germany.
ED
Executive Director.
EGM
Extraordinary General Meeting.
FMO
Nederlandse Financierings-Maatschappij voor

Ontwikkelingslanden N.V., registered in the Netherlands.
I&M or I&M Bank

or Bank
I&M Bank Limited, a company incorporated under the

Companies Act (No. C.8/90) and licensed by the CBK as a
commercial bank.
I&M Bank Group
I&M Bank and its Subsidiaries and Associates.
I&M Bank Shares
The ordinary shares of KES 100/- each in the issued and paid
up share capital of I&M.
I&M-Tz
I&M Bank (T) Limited, a company incorporated in the Republic

of Tanzania, registration number 41958 and licensed by the
BOT as a commercial bank.
IFC
International Finance Corporation, a member of the World Bank

Group.
KES or KShs
Kenya Shillings, being the lawful currency of the Republic of

Kenya.
Key Shareholders
The four largest shareholders of CTL post-acquisition
MIMS
The Main Investment Market Segment of the Nairobi Securities

Exchange.
New Shares
The 363,722,034 new ordinary shares of City Trust Limited to

be issued pursuant to the Offer.
NSE
The Nairobi Securities Exchange.
Offer
The proposed offer by City Trust Limited to acquire all the

remaining 26,704,995 shares in I&M Bank Limited not already
held by City Trust Limited.
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City Trust Limited
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Proparco
Socit de Promotion et de Participation pour la Coopration

Economique, registered in the Republic of France.
Subsidiaries or
Associates
I&M Bank (T) Limited, Tanzania; Banque Commerciale du

Rwanda Limited, Rwanda and Bank One Limited, Mauritius.
"Take-Over
Regulations"
The Capital Markets (Take-Overs and Mergers) Regulations,

2002.
TKF
The Kibo Fund, a private equity fund, registered in the Republic

of Mauritius.
TShs
Tanzania Shillings being the lawful currency of the Republic of

Tanzania.
Rwf
Rwandan Francs being the lawful currency of the Republic of

Rwanda.
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City Trust Limited
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PART II CHAIRMANS LETTER

To: All Shareholders of City Trust Limited (CTL)
Dear Shareholder,
PROPOSED ACQUISTION OF SHARES IN I&M BANK LIMITED NOT ALREADY HELD
BY CITY TRUST LIMITED BY WAY OF SHARE EXCHANGE
1.
INTRODUCTION
On 3rd October 2011, your Board issued a cautionary announcement regarding on-going
negotiations with a regional Bank for the acquisition of its shares in exchange for shares in
your Company.
It now gives me great pleasure to inform you that your Board has since concluded these
negotiations and, in principle, pending shareholder approvals, agreed on the terms with the
regional bank being I&M Bank Limited. You are aware that your Company already holds
7.28% of the shares in I&M. It is proposed that your Company will acquire all of the
remaining 92.72% shares in I&M. The payment consideration for the acquisition of these
remaining shares in I&M will be through the issuance of 363,722,034 New Shares credited
fully paid up to the shareholders of I&M. The effect of this acquisition will be that I&M will
become a wholly owned subsidiary of CTL.
This document provides pertinent information on the effect and impact on your Companys
financial position and the various approvals required to consummate this transaction. The
purpose of this document is to provide you with (i) information on the background and
rationale for undertaking this transaction, (ii) outline the key terms of the proposed
transaction, and most importantly (iii) to seek your approval to proceed with the proposed
offer.
2.
ACQUISITION OF SHARES IN I&M BANK LIMITED
Under the offer, CTL will seek to acquire the remaining 26,704,995 shares comprising
92.72% of the issued and paid up shares in I&M.
By way of background information, I&M possesses a rich heritage in banking. Founded in
1974, the Bank has evolved from a community financial institution to a full-fledged
commercial bank offering a wide range of corporate and retail banking services, making it a
significant player in the Kenyan market. Known for its innovative and wide range of products
and services, it is backed by state-of-the-art technologies, staff strength of close to 500 and
a branch network of 20 in Kenya. I&M has in the recent past established its presence in
the region with 15 branches spread across Mauritius through its associate Bank One
Limited; 6 branches in Tanzania through its subsidiary I&M Bank (T) Limited and 15
branches in Rwanda through its subsidiary Banque Commerciale du Rwanda Limited
(BCR).
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City Trust Limited
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Two leading European Development Financial Institutions (DFIs) Proparco (French) and DEG
(German) own approximately 10.68% of the Bank while the rest is owned by a consortium
of Kenyan investment companies and individuals. Total assets of the I&M Bank Group
exceed KES 144 billion as at 30th September 2012. More details about I&M are set out under
Part III of this circular.
3.
RATIONALE FOR UNDERTAKING THIS ACQUISITION
This transaction represents a win-win situation for both CTL and I&M shareholders as
explained below:
From CTLs Perspective

In deciding to proceed with the acquisition, the Board took into consideration several
factors, the most important of which include the following:
As at the date of this Circular, CTLs investment in I&M Bank represented 7.28% of
the Banks shareholding. Based on the Banks current valuation and CTLs current
market price, CTLs shares are trading at a discount; this being attributed to the
indirect holding of the Banks shares.
However on conclusion of the transaction, I&M Bank will become a wholly owned
subsidiary of CTL, enabling the current shareholders of CTL and potential investors
to directly hold shares in I&M. This will not only enable shareholders of CTL to
directly benefit from the Banks financial performance, but also provide an
opportunity to participate in I&Ms substantial asset base and businesses in the
region. We believe that, this would over a period of time, steer the price of CTL
shares to better reflect the direct shareholding in I&M Bank.
Further, the share swap mechanism has been structured in a manner that is most
beneficial to shareholders of CTL. The structure is such that on completion of the
transaction, CTLs shareholding will, in all material respects, resemble the current
shareholding structure of I&M Bank. Taking into consideration the value of CTLs
other investments, the current shareholders of CTL will collectively hold 7.30% on
conclusion of this transaction, reflecting a marginal increase from their current
shareholding of 7.28%. The Board appreciated that, in contrast, had the share swap
mechanism been structured on market values of the two entities namely I&M Bank
and CTL, the shareholders of CTL would have been significantly diluted in the
process.
Facilitate the increase of the shareholder base of CTL and thereby enhance liquidity
of the Companys shares on the NSE.
Enable CTL to upgrade its listing status on the NSE from the AIMS to the MIMS
following the enhanced shareholder base.
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City Trust Limited
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From I& M s Perspective

Similarly for I&M and its shareholders, this transaction provides several advantages which
are listed below:
Enable I&M achieve its long term objective of listing its shares on the Nairobi
Securities Exchange whilst simultaneously providing liquidity for its institutional,
corporate and individual shareholders.
Provide I&M with a platform to raise additional capital in the future to facilitate the
achievement of its long term growth and expansion strategy, and thereby, improve
upon its capabilities to successfully manage the growth achieved in the last few
years.
4. EFFECT OF THE TRANSACTION ON THE EXISTING SHAREHOLDERS AND THE

COMPANYS FINANCIAL POSITION
The Board acknowledges that this transaction will result in a dilution of your shareholding in
CTL. However, the Board has ensured that transaction be structured in such a way to
ensure that there shall be no dilution of your current indirect shareholding in I&M Bank.
Further, all due care has been exercised to safeguard that the ultimate beneficial
shareholding of the Bank remains materially unchanged. This is illustrated in Part IV, under
shareholding on page 31.
This acquisition will have a significant positive impact on the financial position of your
Company and this has been outlined in further detail under Part IV on pages 32 and 33. For
instance, following the proposed share split and the issuance of the new Ordinary Shares to
I&M Bank Shareholders, CTLs issued share capital will increase from KES 28,640,005 to KES
392,362,039.
All figures in KES
Shareholders' Equity
Paid up/ Assigned share capital
Share premium
Retained earnings (post
acquisition)
All other reserves
Total Shareholders' Equity
City Trust
Unaudited
5mths
31-12-2011
I&M Bank
I&M Holdings
31-12-2011
Consolidated
Consolidated
Consolidated
Postacquisition*
28,640,005
155,000
2,880,245,300
3,773,237,119
391,827,937
13,135,209,676
250,328,270
7,185,254,003
319,575,922
778,067,127
778,067,127
279,123,275
14,616,803,549
14,624,680,662
* The difference in these figures arises from the consolidation effect as per IFR S. Detailed accounts show ing
the full consolidation of accounts are included under P art IV on page 33
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City Trust Limited
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5. PRINCIPAL TERMS OF THE ACQUISITION

i.
Offer: Once approved at the EGM, CTL will make an offer to the shareholders of
I&M under section 210 of the Companies Act to acquire all the shares not presently
held by CTL in exchange for shares in CTL. No cash payment will be made and a
cash alternative will not be provided.
ii.
Share Exchange Ratio: The share exchange ratio as agreed and approved by your
Board is 13.62 shares in CTL with the proposed par value of Kshs. 1.00 (post share
split) for every 1 share in I&M with a par value of Kshs. 100/-. The share-exchange
ratio has been determined keeping in mind that the most equitable basis of valuation
would be based on I&M. In this regard, as CTLs most significant asset is its
shareholding in I&M, CTLs valuation has been based on the fair value of I&M. This
derived value is the basis of the share exchange ratio. The following factors have
also been taken into consideration in determining the share exchange ratio:
CTLs and I&Ms most recent audited financial statements available at that time;
A valuation of I&M Bank carried out by Deloitte for the private placement in
November 2010.
An updated valuation of I&M Bank carried out by Dyer and Blair Investment Bank
in October 2012.
CTLs value per share based on a proportionate share of I&Ms computed value as
above.
Ensuring that in carrying out the transaction and as a result thereof, the ultimate
shareholding of I&M Bank remains materially unchanged.
The transaction is such that I&M Bank shareholders will receive 13.62 new ordinary
shares in CTL for every one share they hold in I&M. Consequently, the consideration
to I&M shareholders will be in the form of an allotment of 363,722,034 New Shares of
CTL which will be credited as issued and fully paid up.
The New Shares, when issued, will have the same rights as the existing ordinary
shares of the Company.
iii.
Change in Name & Board of Directors

It is intended that, upon completion of the Acquisition, the name of the Company will
be changed to I&M Holdings Limited.
The current membership of CTLs Board is as shown below.
Name
Mr. Anil Raja
Position on Board
Chairman
Occupation
Chartered
Accountant
Businessman
Nationality
British
Mr. Parag Anil Raja
Non-Executive Member
Mr. Madabhushi
Soundararajan
Independent NonExecutive Member
Banker
Indian
Mr. Daniel Ndonye
Independent NonExecutive Member
Certified Public
Accountant
Kenyan
British
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City Trust Limited
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It is proposed that the Board of CTL will be reconstituted and will comprise the
following persons:
Name
Position on Board
Occupation
Nationality
Mr. Daniel Ndonye
Chairman (Independent
Director)
Certified Public
Accountant
Kenyan
Mr. SBR Shah, MBS
Non-Executive Director
Banker
Kenyan
Mr. Michael J. Karanja
Independent NonExecutive Director
Business man
Kenyan
Mr. Sarit S. Raja Shah
Banker
Kenyan
Mr. Madabhushi
Soundararajan
Banker
Indian
Senior Investment
Manager
German
Investment Analyst
French
Ms. Christina Gabener

Mr. Gudi Ananch
A brief profile for each of these Directors has been provided under Part V on pages
34 and 35 of this Circular.
iv.
Amendment to the Memorandum and Articles of Association

Your Board is of the view that the transaction represents an opportune moment to
review the Memorandum and Articles of Association for the Company. This document
was drawn up in 1950 and has not been substantially reviewed since then. From 1950
there have been significant changes in the operating and regulatory environment
including the adoption of best practices in areas such as Corporate Governance which
need to be factored into the amended Articles of Association. It is also important to
note that your Company will now become the holding company for the Bank. With
these factors in mind, the Notice of EGM contains resolutions amending the
Memorandum of Association of the Company and adopting new Articles of
Association. Details on the amendments proposed have been provided under Part VI
on page 36 of this Circular.
v.
Transfer of CTL shares from AIMS to MIMS

CTL had applied to the CMA to transfer its shares from the AIMS to MIMS listing, the
Main Board of the Nairobi Securities Exchange. Following the successful completion
of this transaction, CTL will be fully eligible in all aspects to list on the MIMS, save for
the requirement to have 1,000 shareholders. To this end, CTL had requested CMA for
a 6-month period exemption within which the Company will have to increase its
shareholder base from approx. 700 to the required minimum of 1,000 shareholders.
CMA vide its letter dated 6th November 2012 conveyed its approval of the exemption.
It is intended to achieve this as below:
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City Trust Limited
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vi.
Following the conclusion of this transaction, Biashara Securities Limited (BSL), an

existing shareholder of I&M, will hold approx. 13.92% of CTL. BSL is a holding
company that has approx. 1,000 individual shareholders.
It is intended that BSL shall, subject to receipt of court approval and all other
necessary regulatory approvals, be wound up allowing its approx. 1,000
shareholders to hold shares directly in CTL.
Consequently CTLs shareholder base will increase to approx. 1,700 shareholders
thereby being in full compliance with the MIMS requirement. It is anticipated that
this requirement will be met within the 6-months period as required by the CMA.
Transaction Costs: The transaction costs in relation to the acquisition of shares in

I&M, details of which have been provided in Part VIII on page 46 will be funded from
a special dividend to be declared by I&M at completion of the transaction.
6. PROPOSED SHARE SPLIT

Your Board is simultaneously proposing to undertake a share split. The main objective of
this action would be to increase the number of shares in circulation, which would enhance
the liquidity of the shares on the NSE.
It is proposed that the ordinary shares of the Company be split so that the shareholders will
receive 5 new shares for every share they currently hold in CTL. This will reduce the par
value per ordinary share from the current KES 5.00 to KES 1.00.
The current share price of CTL shares is KES 400.00, and thus restricts trading activity in
view of the fact that minimum transaction size is 100 shares. Following the share split, the
price of each share would also decrease by the same factor of 5 thereby increase the
affordability of the Companys shares. Over time, this action would in all likelihood increase
the shareholder base. Likewise, the increased affordability of the shares would improve the
Companys ability to raise funds through the capital markets.
In addition, the split will result in an increase of the current authorised shares for CTL from
10,000,000 ordinary shares with a par value of KES 5.00 to 50,000,000 ordinary shares with
a par value of KES 1.00. Similarly, the issued and fully paid shares will increase from
5,728,001 ordinary shares to 28,640,005 ordinary shares.
The proposed register closing date for the share split is May 28, 2013 following which the
increased shares will be uploaded for trading on June 11, 2013. The same will serve as the
date of commencement of trading in the shares.
7. STATUTORY APPROVALS & RELATED INFORMATION
In compliance with the terms of CMA approval, the key shareholders have agreed to lock in
their shareholding for a period of 24 months effective from the completion of the proposed
transaction. More details on the terms and conditions of the Offer are set out under the
Statutory and General Section on page 43 of this Circular.
Included in Parts III-IX of this Circular are additional information and disclosures on CTL and
I&M Bank, and the future of the Company including pro forma financial information.
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City Trust Limited
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8. EXTRAORDINARY GENERAL MEETING (EGM)

The various resolutions required for the purpose of effecting the proposals set out above
have been outlined in the EGM Notice on Page 48 of this Circular and seek your approval
for:
1. The proposed share split;
2. The increase in authorised share capital;
3. Issuance of the New Shares;
4. The making of the Offer;
5. Amendments to the Companys Memorandum of Association;
6. The adoption of new Articles of Association; and
7. The change of the name of the Company
Each of these resolutions will be submitted for consideration at the EGM of the Company to
be held on Wednesday, February 20, 2013. Subject to approvals by the Shareholders,
regulators and other authorities as applicable, it is expected that the transaction will be
concluded before June 30, 2013.
For purposes of the EGM, you will find enclosed a form of proxy for your use in relation to
the EGM. A proxy need not be a shareholder of CTL. The completion of a form of proxy will
not prevent you from attending and voting in person if you wish to do so.
The form of proxy should be returned to the Companys registered address so as to reach
the registrar no later than 10.00 am Monday, February 18, 2013
9. RECOMMENDATIONS AND VOTING INTENTIONS
For the reasons given in this Circular, your Board is of the opinion that the transaction is in
the best interests of the Company and its shareholders.
The Directors unanimously recommend that all CTL shareholders vote in favour of the
resolutions to be proposed at the EGM, as they intend to do in respect of their own
beneficial holdings of shares, if any.
If you are in any doubt as to what action to take, it is recommended that you seek
independent advice from your stockbroker, bank manager, lawyer, accountant or other
professional adviser.
Yours sincerely,
CHAIRMAN
[DATE]
ON BEHALF OF THE BOARD OF DIRECTORS
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PART III I&M BANK LIMITED

I&M Bank Limited (Bank) possesses a rich heritage in banking. The Bank was established
in 1974 as a financial institution that grew to be a full-fledged commercial bank in 1996.
Today, the Bank has a network of 20 branches and 21 ATMs covering the major financial
centers in Kenya and with an access to over 3,000 ATMs across the country as part of other
networks. I&M Bank has grown to be a significant player in the Kenyan market. The Bank
was recently ranked overall 4th best bank in the industry out of 43 banks, by the 2012
Banking Survey.
The Bank offers a wide range of commercial banking and financial products and services,
and prides itself on introducing innovative products and services based on the needs of its
customers. In 2010, I&M became the first bank in East and Central Africa to be licensed by
VISA for E-Commerce acquisition. This important step has been well perceived in the East
Africa market as plugging the missing link for promoting E-commerce in the country.
I&M Bank is privileged to count, amongst its shareholders, two leading European
development financial institutions (DFIs), Proparco and DEG, who together own
approximately 10.68% of I&M Bank. A major portion of the remaining approx. 90%
shareholding in the bank is held by a consortium of Kenyan investment companies. In
November 2010, the Bank successfully raised KShs. 2.4 billion (approx. USD 30 Million)
through a private placement which resulted in an expansion of the Banks shareholding
base. The Bank also successfully set up and issued shares under an Employee Share
Ownership Plan (ESOP) in July 2011.
As at September 30, 2012, I&M Banks issued and paid up share capital was KShs. 2.88
billion, with a share premium of KShs. 3.77 billion. The total Shareholders Equity as at this
date, stood at KShs. 16.567 billion.
I&M Bank has over the last few years successfully pursued a regional expansion strategy
and established operations in (i) Mauritius through its associate Bank One Limited; (ii)
Tanzania through its subsidiary I&M Bank (T) Limited, and (iii) Rwanda through its
subsidiary Banque Commericale du Rwanda Limited. A summary of each is outlined below.
Bank One Limited, Mauritius
Bank One Limited, formerly known as First City Bank Limited (FCB), is a commercial bank
in Mauritius, licensed to do both on-shore and off-shore banking business, and regulated by
the Bank of Mauritius. FCB was formerly owned by Government of Mauritius institutions,
which divested from the bank by selling their equity in 2008 to I&M Bank and CIEL
Investment Limited, who own 50% each in Bank One.
Bank One represents I&Ms maiden expansion in terms of overseas investments, and
marked the beginning of its strategic expansion outside Kenya. Through Bank One, I&M
offers international off-shore banking, wealth management and trade finance services to a
widespread clientele.
The Mauritian bank has a network of 15 branches, with total assets of Mauritian Rupees
(MUR) 18.072 billion (approx. KShs. 47.71 billion) as at 30th September 2012.
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I&M Bank (T) Limited, Tanzania

I&M Bank (T) Limited (I&M-Tz), formerly known as CF Union Bank Limited (CFUB), is a
commercial bank in Tanzania, licensed and regulated by the Bank of Tanzania. CFUB was a
privately-owned bank, incorporated on 15th April 2002 arising from the merger between
Furaha Finance Limited and Crown Finance & Leasing Limited. CFUB was acquired by I&M
Bank, Proparco, The Kibo Fund and Mr. Michael N. Shirima on 14th January 2010.
I&M-Tz represents I&M Banks first major expansion into the regional East African market,
and was I&Ms first step towards establishing an integrated presence to form a truly regional
Bank serving as the financial gateway to East and Central Africa.
I&M-Tz has a network of 6 branches, with total assets of Tanzanian Shillings (Tzs) 246
billion (approx. KShs. 13.7 billion) as at 30th September 2012.
Banque Commerciale du Rwanda Limited, Rwanda
Banque Commerciale du Rwanda Limited (BCR) was founded in May 1963 and is the
oldest commercial bank in Rwanda. The Bank enjoys a strong reputation of reliability,
innovation and solidity. In July 2012, I&M Bank, along with DEG and Proparco, concluded
the acquisition of 80% of BCRs shareholding. Of the remaining 20%, 19.8% is held by the
Government of Rwanda and the balance by Rwandan nationals.
BCR has a network of 15 branches, with total assets of Rwandan Francs (Rwf) 108 billion
(approx. KShs. 15.4 billion) as at 30th September 2012.
Share Capital
I&M Banks authorized share capital as at 30th September 2012 stood at KShs.
3,000,000,000/- divided into 30,000,000 ordinary shares of a par value of KShs. 100/- each
while the Banks issued and fully paid-up share capital on the same date stood at KShs.
2,880,245,300/- divided into 28,802,453 ordinary shares of a par value of KShs. 100/- each.
The Banks detailed shareholding structure has been outlined in Part IV of this Circular.
Financial Highlights
i) Balance Sheet Summary
In KES 000
Unaudited
Audited
Sep-12
Dec-11
Dec-10
Cash and bank

balances
23,541,476
16,907,146
11,574,636
7,988,560
4,171,292
2,505,917
Loans & advances

to customers
85,547,474
66,365,870
50,257,349
30,480,353
29,775,366
19,214,788
Investment
securities
28,469,926
19,685,792
20,787,432
12,478,398
5,940,879
5,295,305
Property &
equipment
2,546,215
1,915,490
1,734,368
1,530,411
1,373,322
1,091,662
Other assets
4,122,542
3,189,414
2,528,369
1,956,745
1,597,079
1,318,467
144,227,633
108,063,712
86,882,153
54,434,467
42,857,938
29,426,139
Total assets
Dec-09
Dec-08
Dec-07
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Unaudited
Audited
Sep-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Deposits from
banks
7,387,035
2,546,060
1,393,755
221,805
948,644
879,140
Deposits from
customers
111,182,146
85,212,904
68,208,428
44,759,148
34,420,747
23,625,870
Long term
borrowings
5,047,446
3,435,773
2,143,250
1,301,547
1,318,325
238,713
Other liabilities
2,541,446
1,702,305
689,047
991,719
815,462
Total liabilities
126,158,073
92,897,042
73,031,716
46,971,547
37,679,435
25,559,185
Shareholders
equity
16,566,838
14,616,803
13,360,254
7,462,920
5,178,503
3,866,954
1,502,722
549,867
490,183
144,227,633
108,063,712
86,882,153
54,434,467
42,857,938
29,426,139
Minority Interest
ii)
1,286,283
Income Statement Summary

In KES 000
Unaudited
Sep-12
Audited
Interest income
10,339,893
Dec-11
9,031,131
Interest expenses
(5,735,385)
(3,468,275)
(2,779,117)
(2,608,456)
(1,830,206)
(1,057,178)
4,604,508
5,562,856
3,773,797
2,473,211
2,097,208
1,708,691
1,147,414
1,286,040
946,522
644,805
559,645
425,948
1,094,855
1,110,554
1,200,097
365,264
354,632
202,225
Net Interest Income

Net fees & commission
income
Other income
Operating income
Dec-10
6,552,914
Dec-09
5,081,667
Dec-08
3,927,414
Dec-07
2,765,869
6,846,777
7,959,450
5,920,416
3,483,280
3,011,485
2,336,864
Operating expenses
(2,910,227)
(3,005,557)
(2,393,934)
(1,688,446)
(1,419,936)
(1,042,700)
PBT
3,936,550
4,953,893
3,526,482
1,794,834
1,591,549
1,294,164
Tax
(1,170,236)
(1,481,169)
(1,001,914)
(547,419)
(477,873)
(411,312)
PAT
2,766,314
3,472,724
2,524,568
1,247,415
1,113,676
882,852
Board of Directors
The Board of Directors of I&M Bank as at the date of this Circular are:
Director
Profile
Suresh Bhagwanji
Raja Shah, MBS,
Mr Suresh Bhagwanji Raja Shah, a Kenyan national aged 68 years,

is a founder of I&M Bank. He has vast experience in the banking
industry and in business and in December 2002, he was bestowed
the honour of a Moran of the Order of the Burning Spear. He sits
on the boards of several companies.
Chairman and NonExecutive Director

Sarit S. Raja Shah,
Executive Director
Mr Sarit S. Raja Shah, a Kenyan national aged 44 years, joined I&M

Bank in 1993 as the Executive Director after completing his Masters
degree from City University, London. He underwent his training at
Biashara Bank of Kenya Limited. He sits on the boards of several
companies.
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Director
Profile
Michael J. Karanja,
Mr Michael J. Karanja a Kenyan national aged 73 years was the

Deputy Group Chairman and Managing Director of East African
Breweries Ltd from 1993 to 2000. He holds a BSc. in Biochemistry
from Makerere University, Kampala and a Post Graduate Diploma in
Brewing from Herriot-Watt University, Edinburgh, Scotland. He is a
fellow of the Institute of Brewing (U.K) and is the Chairman of
Cooper Kenya Ltd. He sits on the boards of several companies.
Independent, NonExecutive Director
Eric M. Kimani
Independent, NonExecutive Director
Sachit S. Raja Shah
P.C. Mugo Kibati
Madabhushi
Soundararajan

Christina Gabener
Mr Eric M. Kimani, a Kenyan national aged 54 years, was formerly

the Managing Director of Sameer Africa Ltd and is a former CEO of
Kenya Tea Development Agency. He is a Certified Public Accountant
and an advocate of the High Court of Kenya. He has also previously
worked as a financial controller of Williamson Tea, Kenya. He sits
on the boards of several companies, charitable and professional
associations.
Mr Sachit S. Raja Shah, a Kenyan national aged 40 years joined the
board in 2001 from Citibank London. Prior to this, he dealt with
asset management at AMP Asset Management in London and was
an Equities Analyst at HSBC Bank Plc, London.
Mr Mugo Kibati, a Kenyan national aged 43 years, joined the board
in 2008. He is a seasoned business professional recognized for
talented and bold business development and strategy in both East
African and International jurisdictions. Mr. Kibati is the Director
General of the Vision Delivery Secretariat (VDS), created by the
Government of Kenya to ensure timely implementation of the
flagship projects of Vision 2030. Mr. Kibati, the former Chief
Executive Officer of East African Cables Limited, holds a Master of
Science degree from the Massachusetts Institute of Technology,
USA and an MBA from George Washington University, USA. Mr
Kibati has also been recognized as a Young Global leader by the
World Economic Forum.
Mr Madabhushi Soundararajan is an Indian national aged 62 years
and joined the board in 2009. A veteran banker with 38 years in
the banking industry, Mr. Soundararajan was previously the
Managing Director of CFC Bank Limited, Kenya and has held senior
positions in several banking institutions in both Kenya and India.
Ms Christina Gabener, is a German national aged 47 years. She
represents DEG on the Board. She is currently the Senior
Investment Manager in DEGs New Business Africa Department that
is charged with origination of financial sector projects across Africa.
She has previously worked with DEG for the last 11 years in various
capacities, mainly within their Financial Institutions department.
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Director
Profile
Gudi Anach
Mr Gudi Anach, is a French national aged 36 years. He is the

Regional Representative of the French Development Financial
Institution Proparco headed in Nairobi, and represents Proparco on
the Board. He has previously worked with Proparco as a Senior
Investment Officer within the Corporate Division, and as an
Associate Director with Calyon Bank in France.
Eric Kaleja
Alternate Director to Ms.

Christina Gabener
Mr Eric Kaleja, a German national aged 40 years, was appointed to

the Board as an alternate director in 2010. Mr. Kaleja is the holder
of a Masters degree in Business Administration & Economics and a
Bachelors degree in Environmental Economics and Foreign Direct
Investment. Mr. Kaleja is the Regional Director East Africa for
DEG.
The Board has created the following Committees to which certain responsibilities are
delegated, and which meet regularly under well-defined terms of reference. These
Committees report to the Board on a regular basis:
i)
ii)
iii)
iv)
v)
vi)
vii)
Board
Board
Board
Board
Board
Board
Board
Audit Committee
Risk Management Committee
Credit Committee
Procurement Committee
Capital Structure Strategy Committee
Share Transfers Committee
Nomination & Remuneration Committee
Corporate Governance
The Board of Directors of I&M Bank are committed to enforcing high standards of corporate
governance at the Bank as well as its controlled entities (the Group). Underpinning this
commitment is a Corporate Governance Framework that has been established by the Banks
Board, which includes policies and practices designed to ensure that the Board is focused on
its responsibilities to its stakeholders and on creating long term shareholder value while also
focussing on its wider role and responsibility to the society at large.
In its approach to Governance, the Board has attempted to embrace international best
practices and principles so as to ensure optimal stewardship of the Groups assets and
resources. The Bank has an established Code of Conduct and Code of Ethics that bind the
directors and employees to ensure that the Banks business is carried out in an ethical, fair
and transparent manner. Simultaneously the Board has placed strong emphasis on ensuring
local regulatory compliance within the jurisdictions in which the Group operates, as part of
its internal risk management parameters.
In an increasingly uncertain financial environment, the Bank has over the last few years, put
in place the following key policies and procedures to manage risk:
Anti-Money Laundering Policies and Procedures that are rigorously adhered to.
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A Policy for Social and Environment Management, with efforts being devoted to
improving its Environment and Social Risk Management Systems.
An Enterprise Risk Management Framework.
The Bank has established a mechanism for carrying out periodic reviews of the above
policies and procedures in a bid to improve and strengthen them.
Conscious of the fact that effective corporate governance practices are essential to achieve
and maintain our stakeholders trust and confidence in the Bank, and in light of the
constantly evolving corporate governance environment, I&M has consistently strived to
enhance and improve upon the Corporate Governance Framework within the Bank.
Tabulated below are Board Committees, their composition and functions:
COMPOSITION
FUNCTIONS
Board Audit Committee

3 Non-executive Independent
Directors;
1 Non-executive Director
Head of Internal Audit
(Secretary)
Invitees:
Review structure and adequacy of internal controls

Review activities and scope of Internal Audit & Compliance
Departments and assess their effectiveness
Review & co-ordinate between External Auditors & Internal
Audit Department
Review and receive CBK Inspection Report, and put in place
measures to implement recommendations thereof.
Executive Director
CEO
Head of Business Support
Head of Business
Development
Board Risk Committee

3 Independent Non-Executive
Directors,
1 Non-executive Director,
1 Executive Director,
Head of Risk & Compliance
(Secretary)
Invitees:
CEO
Ensure that the Risk Management Framework & the

processes as approved are implemented
Review , monitor & deliberate on the appropriate risk
mitigation approach
Ensure BCP is formulated, tested and reviewed periodically
Review of policies, procedures and exposure limits
Review of proposed strategic initiatives
Creating awareness about Risk Management Process in the
Bank.
Board Credit Committee

3 Independent Non-executive
Directors,
1 Nonexecutive Director,
Chief Executive Officer (CEO)
Head of Credit (Secretary)
Review lending policy

Consider loan applications beyond discretionary limits
granted to CRMC
Review lending by CRMC
Direct, monitor, review all aspects that will impact upon
present and future Credit risk management at the Bank
Ensure compliance with Banking Act and Prudential
Guidelines
Conduct independent loan reviews as and when appropriate.
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COMPOSITION
FUNCTIONS
Board Procurement Committee

3 Independent Non-executive
Directors,
CEO,
Head of Finance (Secretary)
Review & approve the Procurement Policy

Review & consider significant procurement proposals /
consultancy assignments above Managements Delegated
Authority limits
Review and approval of procurement of goods and services
from related parties.
Review & ratify unbudgeted capital expenditure above
Managements Delegated Authority limits
Board Capital Structure Strategy Committee

Directors
1 Executive Director
CEO
1 External Advisor
Head Corporate & Strategic
Planning (CSP)
Chief Manager-CSP
(Secretary)
Review and approve Strategy & Objectives on additional

capital needs.
Ensure optimal capital structure with appropriate mix of debt
and equity to support Banks Strategy
Risk assessment & approval of capital raising avenues
proposed by management.
Regularly review structure and terms of debt capital.
Board Share Transfers Committee

2 Non-Executive Directors
Company Secretary
(Secretary)
Ensure that any new shareholders meet the Boards criteria

of good standing.
Approve / reject applications for the transfer of shares and
approve registration of such transfers.
Give guidance and approve any share allotment arising out
of a bonus / rights issue.
Sign the Share Certificates, under Company Seal, to be
issued to any shareholder.
Board Nomination & Remuneration Committee

Directors
Invitees:
CEO
Head of HR (Secretary)
Assessment of Board requirements for non-executive

directors, including requisite competencies.
Development programs to build individual skills and improve
Board effectiveness.
Board and Senior Management succession planning.
Performance evaluation of the Board, Individual Directors
and of the ED & CEO.
Set remuneration policies & strategic objectives of Board, ED
& CEO.
Set Employee Share Ownership Plan Policy and provide
requisite guidance to Scheme Trustee.
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Organizational Structure
I&Ms Organization Structure is guided by the following principles:
To have a lean & flexible structure to ensure fast turnaround time and efficient
customer service delivery standards;
Simultaneously to have a structure that ensures adequate internal controls, checks
and balances in place to minimize operational risks.
Given below is the top level organization structure for the Bank.
BOARD OF DIRECTORS
Board Committees
Executive Director
Internal Audit
Risk Management
Corporate & Strategic Planning
Business Development
Treasury
Business Support
Projects
Credit
Corporate Banking
Commercial Banking
Card Products
Operations
Finance
Human Resources
Legal
Operational,
Market Risk &
C li
Trade Services
Institutional & Premier
Marketing & Product Development
Information & Communication Technology
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Senior Management
The members of the senior management of I&M Bank consist of banking professionals who
have a wealth of experience with local as well as multinational banks. As at the date of this
Circular the senior management of the Bank are:
Name
Profile
Arun S. Mathur,
Mr Arun Mathur, a Kenyan national aged 59 years, joined I&M

Bank in 2000 and was promoted as CEO in 2002. Mr Mathur holds
a B.Tech (Hons) degree and started his banking career in 1976
with the State Bank of India. He joined the Grindlays Bank, India
in 1982, and worked in their office in Nairobi, Kenya from 1990 to
1994, and has subsequently worked in several other banks in East
Africa.
Amritlal V. Chavda,
Senior General Manager

RamalingamV.Narasimhan,
Senior Executive Manager

L.A. Sivaramakrishna,
Head of Business Development
Lucy Thegeya,
Ruma Shah
Group Head of Internal Audit
Gauri Gupta
Head of Corporate & Strategic

Planning
Henry Kirimania
Head of Treasury
Chhanda C Mishra
Mr Chavda is a Kenyan national aged 69 with 49 years experience

in banking. He joined I&M in 1985 and holds a Professional
Banking Part I certificate from the Kenya Institute of Bankers.
Mr Narasimhan is a Kenyan national aged 74. He has over 31
years banking experience. He holds a B. Com degree and is a
member of the Chartered Institute of Bankers.
Mr Sivaramakrishna is an Indian national aged 55 with 31 years
banking experience. He joined I&M in 2003 as the Head of
Corporate Banking. He holds a Msc. Horticulture and a professional
banking qualification CAIIB.
Ms Thegeya is a Kenyan national aged 50, with 17 years banking
experience. She joined I&M in April 2010, having previously
worked at CFC Stanbic Bank Limited. She holds an MBA in
Finance and is a member of the Institute of Certified Public
Accountants.
Ms Shah is a Kenyan national aged 41, who joined the I&M Group
in 1998 as Head of Finance. She is a Fellow of the Association of
Chartered Certified Accountants and a member of the Institute of
Certified Public Accountants of Kenya.
Ms Gupta is a Kenyan national aged 38, who has 15 years
experience in banking covering Credit, Risk Management, Finance
and Strategic Planning. She holds a B.Com degree and is a Fellow
member of the Association of Chartered Accountants of India.
Mr Kirimania is a Kenyan national aged 41, with 17 years banking
experience. He joined I&M in 2011 as the Head of Treasury,
having previously worked in similar functions at CfC Stanbic Bank
and Co-operative Bank of Kenya. He holds a Bachelor of Education
of Arts degree from Moi University.
Mr Mishra is an Indian national aged 53, with over 29 years
banking experience. He joined I&M in 2012 as the Group Head of
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Name
Profile
Group Head of Projects
Projects. He previously worked at IBM India, where he was the

Managing Consultant, in business analytics and optimization
practice. Prior to his engagement with IBM, he worked as a
Deputy General Manager (Operations) with State Bank of India. He
holds a post graduate degree in Commerce and an MBA in
Information Systems, as well as a bachelor of Law degree and a
diploma in International Banking and Finance.
Ravi Ramamoorthy
Mr Ramamoorthy is an Indian national aged 54 with 33 years

banking experience. He joined I&M in June 2010, and holds BSc
in Mathematics and is a Certified Associate of the Indian Institute
of Bankers (CAIIB).
Head of Corporate Banking
Srinivasan Parthasarthy
Head of Commercial Banking
Suprio Sengupta
Head of Marketing &Product

Development
George Kariuki
Head of Institutional Banking
John Njoroge
Ag. Head of Card Products
Vincent Chisaka
Head of Trade Services
Rohit Gupta
Head of Information &

Communication Technology
Joseph Njomo
Head of Operations
Mr Parthsarathy is an Indian national aged 47 with 21 years

banking experience. He joined I&M in December 2005 as General
Manager, Commercial Banking. He holds a M.Comm and is a
Certified Associate of the Indian Institute of Bankers (CAIIB).
Mr Sengupta is a Kenyan national aged 49 with 23 years banking
experience. He joined I&M in 2000 to develop and market new
products. He holds an MBA (Finance & Marketing) and a CAIIB
professional banking qualification.
Mr Kariuki is a Kenyan national aged 54 years with 25 years
banking experience. He joined I&M May 2010 and holds a BSc
degree in Marketing and a Masters of Business and Public
Administration.
Mr Njoroge is a Kenyan national aged 43 years, with over 18
years banking experience. He joined I&M Bank in 2011.
Previously, he has worked with CBA, Imperial Bank, CfC Bank and
Eco Bank. He holds a Bachelors degree in Economics and is
currently pursuing a Masters degree.
Mr. Chisaka is a Kenyan national aged 46 years with 24 years
banking experience. He joined I&M in 2001, and holds a Bachelor
of Commerce Degree, Management option, and is an Associate of
the Kenya Institute of Bankers.
Mr Gupta is an Indian national aged 41 with 17 years banking
experience. He joined I&M in 2006 as General Manager ICT. He
holds a degree in Technology and has professional ICT
qualifications in Oasis IST, ATM, Finacle eChannels.
Mr Njomo is a Kenyan national aged 46 with 26 years banking
experience. He joined I&M in 2000. He holds a B.Comm in
Accounting.
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Name
Profile
Jyoti Patel
Ms. Patel is a Kenyan national aged 42 who has several years of

experience in Audit and Finance. She joined I&M in 2007 as the
Head of Finance. She is a member of the Association of Chartered
Certified Accountants and a member of the Institute of Certified
Public Accountants of Kenya.
Head of Finance
John Waka
Group Head of Human

Resources
George Jaba
Head of Credit
Nina Madanguda
Head of Legal
Kenas Otieno
Head of Risk and Compliance
Mr. Waka is a Kenyan national aged 54 with 18 years banking

experience. He joined I&M in 2004 as head of Human Resources.
He holds a B.A in Economics and a Post graduate Diploma in
Economics.
Mr Jaba is a Kenyan national aged 43 who has several years of
banking experience. He joined I&M in 1992 in the Credit
department. He holds a B.Com degree, CPA Level II and a
diploma from the Kenya Institute of Bankers.
Ms Madanguda is a Kenyan national aged 31, with over 8 years
banking experience. Prior to her appointment at I&M Bank in
2010, she worked with the Consolidated Bank of Kenya. She holds
a Bachelor of Law degree from the University of Nairobi and a
diploma in Law, from the Kenya School of Law.
Mr Otieno is a Kenyan national aged 37, with over 12 years
banking experience. He joined I&M in February 2011. Prior to his
appointment, he worked for Standard Chartered Bank and KCB. He
holds a B. Com in Management Science from the University of
Nairobi
Key Strengths of the Bank
Loyal and growing Customer base
Customer Focused
Turnaround Times
Regional Presence
I&M Bank has a strong, well-diversified and loyal customer base that is continually
growing, on the strength of the Banks innovative and convenient products.
The needs of the Banks customers are of utmost importance to I&M and one of the
main factors influencing critical decisions such as location of branches, improvements
made to service delivery standards and the products which are introduced. At every
stage, efforts are made to ensure that our customers experience superior quality and
convenient banking services, making I&M the Bank of Choice
A key strength of the Bank is its rapid turnaround times for products and services
offered to customers across the board. This has always been a highly-valued aspect of
the services the Bank offers to its customers.
In line with the needs of our customers, as well as the growing interconnectedness of
the East African and Sub-Saharan economies, I&M has embarked on a regional
expansion programme, and currently has subsidiaries in Tanzania and Rwanda and an
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associate in Mauritius. The Banks growing regional presence ensures that the Groups
combined customer base is able to enjoy a wider range of products and services with
their bank of choice across these countries. I&M is the only Kenyan bank that has a
presence in Mauritius, thereby offering its customers a unique set of products and
services.
The Bank aims to continue growing its regional footprint, particularly in the East African
region, and is actively pursuing the fulfilment of this strategy with a view to having a
presence in Uganda.
Growth Track record
Trade Finance Capabilities
The Bank has an impressive track record for growth on several parameters, including,
customer base, loans and deposits portfolios, range of products and services,
technological innovations, number of branches, profits and returns to shareholders, and
in recent years, its regional growth trajectory.
The Bank is able to offer attractive terms as it enjoys a Trade Finance Line for an
amount of USD 22 million under IFCs Global Trade Finance Programme (GTFP), which
enables the Bank to confirm Letters of Credit for a period of up to 720 days. The Bank
also has a wide spectrum of facilities from its international correspondent banks, which
gives it a competitive edge.
Unique combination of well-respected and well-regarded shareholders & strategic

alliances
I&M Bank is privileged to count amongst its shareholders highly respected Development
Financial Institutions DEG and Proparco, who together own almost 10.7% of the Bank.
In addition, the Bank enjoys the support of its long-standing local individual and
institutional shareholders, who are extremely well-respected and enhance the confidence
and trust placed in the Bank by its customers.
Proparco also has a 20% equity stake in I&M-Tz, an effective equity stake of 12.5% in
BCR and has provided Tier II capital of USD 6million to Bank One and a Senior Debt
facility of USD 5million to I&M-Tz.
DEG also has an effective equity stake of 12.5% in BCR.
The Banks strategic alliances with Proparco, DEG, FMO and IFC have allowed the Bank
to benefit from technical assistance programmes that have ensured the Bank has stateof the-art systems, policies and procedures in the areas of Anti-Money Laundering,
Environmental and Social Protection and Positive Living.
Reputation and Image
Governance and Management
Guided by a strong sense of ethics, the Bank has established and maintains a reputation
of a solid, clean, up-market Bank that provides quality banking services.
The Bank has put in place management and governance structures that are in line with
international best practices and ensures that the Bank is a well-run enterprise and
complies at all times with the Central Bank of Kenyas Regulations and Prudential
Guidelines. A significant number of Directors on I&Ms Board comprises Independent
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Directors who are able to bring their considerable expertise to the table, while the
Banks Management is composed of seasoned bankers who continue to ably steer the
Bank in achieving its strategic objectives.
Products & Services
I&M offers a wide range of commercial banking and financial products and services, and
prides itself on introducing customer-centric innovative products and services.
Given below is the list of the Banks product offering under various business lines:
(i) Corporate Banking:
Business Bank Account Plans Sapphire, Biashara, Alpha, Savannah, Noble

Term and Working Capital Loans
Project Financing
Property Development Financing
Insurance Premium Financing
Asset Financing
Collateral Management Financing
Guarantees
Trade Finance Products
E Commerce
(ii) Personal Banking
Personal Bank Account Plans Select, Sapphire, Bahati, Tayari, Malaika, Young
Savers
Term Deposits
Recurring Deposits
Home Mortgage Loans
Personal Loans
VISA Credit and Debit Cards
VISA Prepaid Cards
International American Express
Travellers Cheques
Gift Cheques
Safe Deposit Lockers
(iii) Alternate Banking Channels

Payment Cards: Customers have easier and safer access to funds through various
payment cards such as:
International VISA Debit Cards

International VISA Credit Cards
Local and International I&M VISA Prepaid Cards
Co-branded Cards Nakumatt, Safaricom, Tamarind, AAR, USIU
Further, customers have access to their accounts through:

24 hour call centre Access to live customer service
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Next Gen facilities Mobile alerts, email statements

IClick Internet banking
Mobile banking Allows mobile cash transfers from your account
(iv) Custodial Services

I&M is registered by the Capital Markets Authority (CMA) as an Authorised
Depository and the Bank has a fully functional Custodial Services Unit.
(v) Investm ent M anagem ent Services

This is a facilitation service offered by the Bank to its customers, to enable them to
manage their investments in the money markets, shares and government securities
from a single point of contact in a personalised and professional environment.
(vi) E-Com m erce Services

I&M Bank is the first and only Bank in East and Central Africa to be awarded a
license for E-Commerce acquisition. This important step has been broadly perceived
in the Kenyan market as plugging the missing link for promoting E-Commerce in the
country.
Corporate Recognition
I&M has in recent years received several corporate awards in recognition of quality
management practices and technological progressiveness. These include
2012 Banking Survey Award Best Bank in Product Innovation: Step-up Home Loan.
2012 Banking Survey Award Runner Up for Best Bank in Kenya (Tier II).
2012 Banking Survey Award 2nd Runner Up for the Most Efficient Bank.
2011 Banking Survey Award Best Bank in Product Innovation: M-Pesa Prepay Safari
Card.
2011 Banking Survey Award 2nd Runner Up for Best Bank in Kenya (Tier II).
2011 Banking Survey Award 2nd Runner Up for the Most Efficient Bank.
2010 Banking Survey Award 2nd Runner Up for Best Bank in Technology Use for ECommerce.
2009 Banking Survey Award 1st Runner Up for Best Bank in Product Innovation: I&Ms
Recurring Deposit Account.
2008 Banking Survey Award for Most Efficient Bank and Best Bank in Product Marketing.
2007 Market Intelligence Banking Survey Awards Gold Award for Most Efficient Bank.
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PART IVIMPACT OF THE TRANSACTION

The transaction has been analysed on the impact it will have on the shareholding structure
and financial presentation of the Company as below.
1. Shareholding structure (Pre- and post-transaction)
Current City Trust shareholding structure (Before split)

The shareholding structure of City Trust as at December 31, 2012 is as follows:
Shareholder
1
2
3
4
5
6
7
8
9
10
11
Prime Securities Investment

Rakesh Prakash Gadani
Minard Holdings Limited
Beechwood Overseas Limited
Mahendra Dahyabhai Patel
Fatima Sadrudin Karim Jiwa
Mr. Rajnikant Nathoobhai Shah
Cannon Assurance (Kenya) Limited
Subodh K. Gadani
Vijay Vashdev & Ashwin Vashdev
Others (Approximately 591 Others)
TOTAL
Shareholding as at 31-12-2012
No. of Shares
2,862,702
331,670
272,155
240,000
140,062
138,317
70,009
67,451
57,662
50,300
1,497,673
5,728,001
% Holding
49.98%
5.79%
4.75%
4.19%
2.45%
2.41%
1.22%
1.18%
1.01%
0.88%
26.15%
100%
Current City Trust shareholding structure (After Split)

The shareholding structure of City Trust as at December 31, 2012 after the proposed share
split would be as follows:
Shareholder
1
2
3
4
5
6
7
8
9
10
11
Prime Securities Investment

Rakesh Prakash Gadani
Beechwood Overseas Limited
Mahendra Dahyabhai Patel
Fatima Sadrudin Karim Jiwa
Mr. Rajnikant Nathoobhai Shah
Cannon Assurance (Kenya) Limited
Subodh K. Gadani
Vijay Vashdev & Ashwin Vashdev
Others (Approximately 591 Others)
TOTAL
Shareholding as at 31-12-2012
No. of
No. of
Shares
Shares after % Holding
before split
split
2,862,702
14,313,510
49.98%
331,670
1,658,350
5.79%
272,155
1,360,775
4.75%
240,000
1,200,000
4.19%
140,062
700,310
2.45%
138,317
691,585
2.41%
70,009
350,045
1.22%
67,451
337,255
1.18%
57,662
288,310
1.01%
50,300
251,500
0.88%
1,497,673
7,488,365
26.15%
5,728,001 28,640,005
100%
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Current I&M Bank shareholding structure

Details of the significant shareholders of I&M Bank as at December 31, 2012 are as follows:
Particulars of Shareholders
1
2
3
4
5
6
7
8
9
10

Biashara Securities Limited
Tecoma Limited
Ziyungi Limited
DEG
Proparco
City Trust Limited
The Registered Trustees Bhagwanji Raja
Charitable Foundation
Quadrant Services Ltd A/C I&M ESOP Trust
Others (approximately 103 others)
Total
Shareholding as at 31-122012*
No. of Shares
% Holding
4,875,759
16.93%
4,008,740
13.92%
4,800,000
16.67%
5,400,000
18.75%
1,800,000
6.25%
1,275,000
4.43%
2,097,458
7.28%
694,848
2.41%
100,000
3,750,648
0.35%
13.02%
28,802,453
100.00%
* Shareholding amended to reflect transfers in progress, further explained below
Share Transfers in progress

As at the date of this Circular, the following share transfers are in progress, and shall be
concluded prior to the opening of the Offer Period:
Proparco has reduced its shareholding in I&M Bank, by selling 1,300,000 of its shares
in I&M Bank to Minard Holdings Limited and Ziyungi Limited.
Further, DEG has reached an agreement to sell 1,300,000 of the shares which it
holds in I&M Bank to Tecoma Limited and Ziyungi Limited.
Pro-form a im pact of the acquisition on CTLs shareholding structure

Following the split, on the assumption that 100% of I&M Bank Shareholders accept the
Offer, the resulting shareholding in City Trust will be as set out in the table below.
Particulars of Shareholders
CTL Shareholding Post

Acquisition
No. of shares
% Holding
Ziyungi Limited
73,548,000
18.75%
67,768,613
17.27%
Tecoma Limited
65,376,000
54,599,039
16.66%
13.91%
DEG
Proparco
24,516,000
17,365,500
6.25%
4.43%
Prime Securities
The Registered Trustees Bhagwanji Raja
Charitable Foundation
I&M ESOP Trust
14,313,510
3.65%
9,463,830
2.41%
1,362,000
0.35%
Held by Public
64,049,547
16.32%
392,362,039
100%
Total
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2. Pro-forma Financial Statements
Sum m ary pro-form a consolidated profit and loss statem ent

To allow you to appreciate the potential financial implications of the newly acquired
subsidiaries on the consolidated results of City Trust, the table below comprises a pro-forma
consolidated summary profit and loss statement for the year ended 31st December 2011.
This pro-forma profit and loss statement has been prepared on the assumption that the
acquisition transactions and related refinancing of the newly acquired subsidiaries had been
completed on 31st December 2011.
All figures in K ES
City Trust
I&M Bank
I&M Holdings
Unaudited 5mths
31-12-2011
Consolidated
31-12-2011
Consolidated
Post-acquisition
1,559,493
9,031,130,752
9,032,690,245
(3,468,274,810)
(3,468,274,810)
1,559,493
5,562,855,942
5,564,415,435
Net Fees & Commission Income
1,286,040,072
1,286,040,072
Investment / Dividend income
Other income
1,110,553,805
1,110,553,805
Total Non-Interest Income
2,396,593,877
2,396,593,877
1,559,493
7,959,449,819
7,961,009,312
Interest Income
Interest Expense
Net Interest Income
Non-operating Income
Total Operating Income

Other Operating Expenses
Loan loss provisions
249,952,677
249,952,677
Staff costs
1,484,091,145
1,484,091,145
Premises & Equipment costs
201,043,272
201,043,272
Depreciation + Amortisation
204,692,395
204,692,395
1,025,027
865,777,640
866,802,667
1,025,027
3,005,557,129
3,006,582,156
Profit Before Tax
534,466
4,953,892,690
4,954,427,156
Tax
(467,847)
(1,481,168,719)
(1,481,636,566)
66,619
3,472,723,971
3,472,790,590
(88,686,039)
(88,686,039)
66,619
3,384,037,932
3,384,104,551
Other operating & admin expenses

Total other Operating Expenses
Profit After Tax

Minority Interest
Profit after tax, minority interest
and exceptional items
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Sum m ary pro-form a consolidated balance sheet

The table below sets out the potential impact on City Trust's balance sheet of the successful
completion of the Offer.
All figures in K ES
City Trust
Unaudited
5mths
I&M Bank
I&M Holdings
31-12-2011
Consolidated
31-12-2011
Consolidated
Consolidated
Post-acquisition
ASSETS
762,300,573
762,300,573
Cash (both local and foreign)
Balances due from Central Banks
6,235,786,606
6,235,786,606
Investment Securities
Deposits and Balances due from Local
banking Institutions
Deposits and Balances due from banking
institutions abroad
19,685,791,796
19,685,791,796
32,858,889
658,864,000
691,722,889
9,250,194,869
9,250,194,869
66,365,869,990
66,365,869,990
273,701,470
Property and equipment
1,915,489,873
1,915,489,873
Prepaid lease rentals
250,883,040
250,883,040
Intangible assets
1,225,023,116
1,227,478,425
Deferred tax asset
324,148,418
324,148,418
Other assets
1,389,360,098
1,389,360,098
306,560,359
108,063,712,379
108,099,026,577
Loans and advances to customers (net)

Investment in subsidiary companies
Total Assets
EQUITY AND LIABILITIES
Liabilities
Customer deposits
Deposits and balances due to local banking
institutions
Deposits and balances due to foreign
banking institutions
85,212,903,828
85,212,903,828
1,458,569,000
1,458,569,000
1,087,491,409
1,087,491,409
Long term borrowings
3,435,773,450
3,435,773,450
106,188
326,369,628
326,475,816
Tax payable
27,233,511
27,233,511
97,385
1,375,934,460
1,376,031,845
27,437,084
92,897,041,775
92,924,478,859
28,640,005
2,880,245,300
391,827,937
155,000
3,773,237,119
13,135,209,676
142,330,963
142,330,963
250,328,270
7,185,254,003
319,575,922
Proposed dividends
747,424,874
747,424,874
Statutory loan loss reserves
91,470,947
91,470,947
Available-for-sale reserve
(327,832,140)
(327,832,140)
Translation reserve
124,672,483
124,672,483
279,123,275
14,616,803,549
14,624,680,663
549,867,055
549,867,055
306,560,359
108,063,712,379
108,099,026,577
Dividends Payable
Other Liabilities
Shareholders' Equity
Paid up/ Assigned share capital
Share premium
Revaluation reserves
Retained earnings (post acquisition)
Total Shareholders' Equity

Minority Interest
Total Liabilities and Shareholders'
Equity
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PART V PROPOSED CHANGES IN BOARD STRUCTURE AND

PROFILES OF THE PROPOSED BOARD OF DIRECTORS
Proposed changes in the Board Structure
Upon the successful conclusion of the transaction, it is proposed that CTL will set up the
following committees that will assist the board in its discharge of duties. This will also
ensure compliance with the Capital Markets Act (Cap. 485A) Guidelines on Corporate
Governance Practices by Public Listed Companies in Kenya.
(i) Board Audit & Risk Committee
(ii) Board Remuneration and Nomination Committee
Profiles of the Proposed New Board of Directors
It is also proposed to reconstitute the Board of CTL as under:
Director Name
Profile
Daniel Ndonye,
Mr Daniel Ndonye, a Kenyan national aged 63, has been a

director on the Board of CTL since October 2010. He is a
chartered accountant by profession, having worked with
Deloitte & Touche for over 30 years, 20 of which he was a
Managing/Senior Partner. He holds a Bachelor of Commerce
degree from the University of Nairobi. He is a fellow of the
Institute of Chartered Accountants in England and Wales, the
Institute of Certified Public Accountants of Kenya and the
Institute of Certified Public Secretaries of Kenya. He sits on the
boards of several companies, among which 4 are listed on the
NSE, including CTL.
Independent
Chairm an
Suresh Bhagwanji
Raja Shah, MBS,
Non-Ex ecutive
Christina Gabener
Non-Ex ecutive
Gudi Anach
Non-Ex ecutive
Mr Suresh Bhagwanji Raja Shah, a Kenyan national aged 68

years, is a founder of I&M Bank. He has vast experience in the
banking industry and in business. In December 2002, he was
bestowed the honour of a Moran of the Order of the Burning
Spear. He sits on the boards of several companies.
Ms Christina Gabener, is a German national aged 47 years. She
represents DEG on the Board. She is currently the Senior
Investment Manager in DEGs Africa Department that is charged
with origination of financial sector projects across Africa. She
has previously worked with DEG for the last 11 years in various
capacities, mainly within their Financial Institutions department.
Mr Gud Ainach, is a French national aged 36 years. He is the
Regional Representative of the French Development Financial
Institution Proparco headed in Nairobi, and represents Proparco
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on the Board. He has previously worked with Proparco as a

Senior Investment Officer within the Corporate Division, and as
an Associate Director with Calyon Bank in France.
Sarit S. Raja Shah,
Non-Ex ecutive
Michael J. Karanja
Independent NonExecutive
Madabhushi
Soundararajan
Independent NonExecutive
Mr. Sarit S. Raja Shah, a Kenyan national aged 44 years, joined

I&M Bank in 1993 as the Executive Director after completing his
Masters degree from City University, London. He underwent his
training at Biashara Bank of Kenya Limited. He sits on the
boards of several companies.
Mr. Michael Karanja, a Kenyan national aged 73 years was the
Deputy Group Chairman and Managing Director of East African
Breweries Ltd from 1993 to 2000. He holds a BSc. in
Biochemistry from Makerere University, Kampala and a Post
Graduate Diploma in Brewing from Herriot-Watt University,
Edinburgh, Scotland. He is a fellow of the Institute of Brewing
(U.K) and is the Chairman of Cooper Kenya Ltd. He sits on the
boards of several companies.
Mr Madabhushi Soundararajan is an Indian national aged 62
years and joined the board in 2009. A veteran banker with 38
years in the banking industry, Mr. Soundararajan was previously
the Managing Director of CFC Bank Limited, Kenya and has held
senior positions in several banking institutions in both Kenya
and India.
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PART VI PROPOSED AMENDMENTS TO MEMORANDUM &

ARTICLES OF ASSOCIATION
Upon successful conclusion of the transaction , it is intended to amend the Memorandum of
Association of CTL and adopt new Articles of Association as set out in the Notice of EGM in
Part IX of this Circular.
The following is a summary of the principal proposed changes. This summary is not
exhaustive and should not be regarded as a substitute for reading the new Articles of
Association which will be circulated with the Notice of EGM.
Memorandum of Association
It is proposed that the objects listed in paragraphs (a) to (f) of Clause 3 of the
Memorandum of Association should be abandoned. These relate to the former brewery
business carried on by the Company which are no longer applicable or appropriate for an
investment holding company.
The objects will be expanded by two new objects providing that the business of the
Company will be that of an investment holding company.
Articles of Association
The existing Articles of Association of the Company were drafted many years ago under the
Companies Ordinance, 1933. They are now out of date and have not taken into account
developments in the law, corporate governance and modern communications. It is
proposed that the existing Articles be replaced in their entirety by a new set of Articles.
In addition, substantial holders in I&M Bank wish to preserve some specific shareholder
rights similar to the rights which they enjoy under the Articles of Association of I&M Bank.
Significant changes in the new Articles include:
The removal of the provisions which applied to the original acquisition of the brewery
business (old Articles 3 and 4).
A provision that new shares to be issued by way of rights unless otherwise resolved
by the shareholders by ordinary resolution (new Article 14). The old Article 56 only
requires a rights issue if so resolved on an increase of capital.
The addition of provisions designed to deal with the application of the Depositories
Act (new Articles 20 to 27 inclusive)
The introduction of customary requirements as to the transfer of shares (new Article

42).
The inclusion of provisions allowing the issue of share warrants (new Articles 60 to
62 inclusive)
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The removal of the existing restrictions on borrowing contained in old Article 59.
The extension of the required notice period for General Meetings from 14 days to 21
days (new Article 68).
Power for the Board to postpone meetings due to unforeseen events beyond the
control of the Board (new Article 71).
Change of the quorum requirement from 5 members to 3 members present in person

or by proxy and holding not less than 50% of the issued ordinary share capital (new
Article 73).
More detailed provisions governing the conduct of General Meetings (new Articles 74
to 79 inclusive).
Provisions designed to facilitate the submission of proxies by electronic means (new

Article 95).
An alternative form of proxy where the shareholder wishes the proxy to vote in a
specified manner (new Article 97).
The notice and other communication provisions have been updated to take account
of modern day communications (new Articles 168 to 173 inclusive).
Provisions have been added prescribing the circumstances in which the company
may dispose of records (new Articles 174 and 175).
Special rights of the Development Finance Institutions (DEG and PROPARCO) to

appoint directors or observers, to veto certain matters and to call meetings (new
Articles 178 to 189 inclusive).
Special rights for the principal shareholders to appoint Directors (new Articles 190
and 191).
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PART VII RISK FACTORS

On conclusion of the acquisition, I&M Bank will be a wholly owned subsidiary of CTL. In
addition to the general risk factors that CTL shareholders have previously been exposed to,
this transaction increases their exposure to the banking sector.
I&M Bank, over the years, has had a keen focus on risk management both in its business
processes and products, which have aided the Banks steady growth. Post-acquisition, CTL
will ensure that this keen focus is carried on both at the holding and bank level.
Risk management principles:
The following risk management framework already established at all levels of the Bank, will
be replicated at the holding company to ensure that risks identified are adequately
considered and mitigated:
The Board of Directors at both the CTL and bank level assume the ultimate
responsibility for the level of risks taken and are responsible to oversee the effective
implementation of the risk strategies;
The organizational risk structure and the functions, tasks and powers of the
committees, employees and departments involved in the risk processes are
continuously reviewed to ensure their effectiveness and the clarity of their roles and
responsibilities;
Risk issues are taken into consideration in all business decisions. Measures are in
place to develop risk-based performance measures and this is being supplemented by
setting risk limits at the company level;
Risk management has been integrated into various management processes such as
strategic planning, annual budgeting and performance measurement;
Identified risks are reported in a transparent and timely manner and in full;
Appropriate and effective controls exist for all processes.
Outlined below are some uncertainties and risks that CTL faces currently as well as a result
of the increased exposure to the banking sector. In addition to these, there may be other
risks and uncertainties not presently known to CTL or that it currently believes not to be
material that may also have an adverse effect on CTLs future performance, which may
cause the price of shares to decline.
1 General Risks
(i) Political Risk
Kenya, like many developing countries, is subject to political risks that may arise from
political unrest which could adversely impact the general economy and specifically, the
banking sector. Following the last general elections, Kenya went through a period of civil
unrest that resulted in a slowdown of the economy. Banks in particular saw a decline in
demand for credit and financial services, which led to a decrease in performance. It is
hoped that with the implementation of the new constitution and measures in place, that
the Country shall not experience the same unrest.
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(ii) Economic Risk

Inflation has been on an increasing trend since 2008 directly impacting various sectors
of the Countrys economy. Likewise, other economic factors that have adversely affected
the performance of the Kenyan economy include the exchange rate fluctuations of the
Kenya Shilling, erratic interest rates and reduction in bilateral and multi-lateral aid.
Efforts are being made on infrastructural improvements and investments in most sectors
of the economy, throughout the country aimed at lowering the cost of doing business in
the Kenya. Additionally, as I&M Bank operates within the wider region, the stability of
other East African economies could impact CTLs overall performance.
2 Risk factors relating to the Business
This section provides details of the Banks exposure to risk and describes the methods used
by management to control risk. The most important types of risk to which the Bank is
exposed are liquidity risk, credit risk, market risk and operational risk. Market risk includes
currency risk and interest rate risk.
(i) Regulatory Risk
Regulatory risk relates to the risk of non-compliance with laws, rules, regulations,
prescribed practice or ethical standards issued from time to time. Regulatory risk may
arise in instances where the laws and rules governing the conduct of business may be
ambiguous or change drastically.
CTLs regulatory risks arise from its compliance to the Companies Act as well as the
Capital Markets Act and other guidelines as may be stipulated by the relevant
authorities. Likewise, on conclusion of this transaction, CTL will to some extent be
regulated by the Central Bank of Kenya. Banking services in Kenya are regulated by the
Banking Act (and its amendments), the Finance Act and the CBK, under which I&M Bank
is regulated. New policy guidelines and regulations issued by the CBK could impact on
the operations of the Bank and hence CTLs performance.
(ii) Credit Risk
Credit risk is the risk of financial loss to the Bank if a customer or counterparty to a
financial instrument fails to meet its contractual obligations, and arises principally from
the Banks loans and advances to customers and other banks and investment securities.
For risk management reporting purposes, the Bank considers and consolidates all
elements of credit risk exposure.
The Board of Directors has delegated responsibility of the management of credit risk to
its Board Credit Committee. A separate Bank Credit Risk Management Committee
reporting to the Board Credit Committee is responsible for oversight of the Bank credit
risk.
The risk that the counter-parties to trading instruments might default on their obligation
is monitored on an on-going basis. In monitoring credit risk exposure, consideration is
given to trading instruments with a positive fair value and to the volatility of the fair
value of trading instruments over their remaining life.
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To manage the level of credit risk, the Bank deals with counter parties of good credit
standing, enters into master netting agreements wherever possible and when
appropriate, obtains collateral.
The Bank also monitors concentrations of credit risk that arise by industry and type of
customer in relation to Bank loans and advances to customers by carrying a balanced
portfolio. The Bank has no significant exposure to any individual customer or counterparty.
To determine impairment of loans and advances, the Bank assesses whether it is
probable that it will be unable to collect all principal and interest according to the
contractual terms of the loans and advances.
(iii) Liquidity Risk
Liquidity risk includes the risk of being unable to meet the Banks financial obligations as
they fall due because of inability to liquidate assets at a reasonable price and in an
appropriate timeframe.
The Bank continually assesses liquidity risk by identifying and monitoring changes in
funding required to meet business goals and targets set in terms of the overall Bank
strategy. In addition, the Bank holds a portfolio of liquid assets as part of its liquidity risk
management strategy
(iv) Market Risk
Market risk is the risk that changes in market prices, such as interest rate, equity prices,
foreign exchange rates and credit spread (not relating to changes in the
obligators/issuers credit standing) will affect the Banks income or the value of its
holdings of financial instruments.
All trading instruments are subject to market risk, the risk that future changes in market
conditions may make an instrument less valuable or more onerous. The Bank manages
its use of trading instruments in response to changing market conditions.
The Board of Directors has delegated responsibility for management of Market Risk to
the Board Risk Committee. Exposure to market risk is formally managed within Risk
Limits and Policy Guidelines issued by the Board, on recommendation of the Board Risk
Committee. ALCO, a Management Committee is charged with the responsibility of
ensuring implementation and monitoring of the Risk Management framework in line with
Policy Guidelines. The Bank is primarily exposed to Interest Rate and Foreign Exchange
Risk. The policy guidelines and procedures in place are adequate to effectively manage
these risks.
(v) Operational Risk
The overall responsibility of managing Operational Risks - the risk arising from failed or
inadequate internal processes, people, systems and external events - is vested with the
Board of Directors. The Board through the Board Risk Committee issues policies that
guide management on appropriate practices of operational risk mitigation. An
independent Risk Manager assures the Board Risk Committee of the implementation of
the said policies.
The following are key measures that the Bank undertakes in managing operational risk:
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Documentation of procedures and controls, including regular review and updates to

reflect changes in the dynamic business environment.
Appropriate segregation of duties, including the independent authorisation of
transactions.
Reconciliation and monitoring of transactions.
Compliance with regulatory and other legal requirements.
Reporting of operational losses and ensuring appropriate remedial action to avoid
recurrence.
Development and implementation of Business Continuity and Disaster Recovery
Plans.
Training and professional development of employees to ensure they are well
equipped to identify and mitigate operational risks in a timely manner.
Establishment of ethical practices at business and individual employees level.
Implementation of Risk mitigation parameters, including insurance where this is
considered effective.
The entire operational risk management framework is subjected to periodic independent

audits (internal) in order for the bank to obtain an independent opinion on the
effectiveness and efficiency of the framework. Further, the findings of the Internal Audit
department are reviewed by the Board Audit Committee and recommendations made
implemented in line with the agreed timeframe.
(vi) Strategic Risk
Strategic risk is the current and prospective impact on earnings or capital arising from
adverse business decisions, improper implementation of decisions or lack of
responsiveness to industry changes. I&M is managing strategic risk as below:
I&M has a Board approved Corporate and Strategic Planning policy that is reviewed
periodically, and whose implementation is monitored by the Executive Office.
A business strategy that covers a 5 year planning cycle which is well defined and
documented and covers each area of product development, growth, marketing,
sales, human resource development and information and communication
technology.
Implementation of well-defined annual budgets and corporate objectives.
I&M has in place internal systems to ensure regular monitoring and analysis of its
external and internal environment so as to gather relevant management
information and ensure that I&M is not unduly exposed to strategic risk.
Additionally the Bank is exposed to risks arising out of the operating environment
characterized by increased competition in the Banking industry, retention of key
staff, continued development of financial and management controls and
information technology systems and their implementation, and maintaining if not
growing the profit margins.
(vii) Reputational Risk

Reputational risk is the potential that negative publicity regarding an institutions
business practices, whether true or false, will cause a decline in the customer base,
costly litigations, or revenue reductions.
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This risk may result from a financial institutions failure to effectively manage any or all
of the other risk types. The ultimate accountability for reputational risk management
rests with the Board. The Board of Directors explicitly addresses reputational risk as a
distinct and controllable risk through a versatile and robust risk management framework
for reputational risk. Responsibility for corporate reputation resides with the Executive
Directors and Chief Executive Officers offices.
3 Risks relating to this transaction
(i) Share Liquidity
CTLs shares are listed on the NSE. This transaction is envisioned to increase the
number of CTL shares available for trading, by increasing the number of shares,
through the share split, as well as the shareholder base, through the share swap.
However, it is not possible to accurately predict whether investor interest in the
Company after the transaction will lead to the development of a more active trading of
CTL shares on the NSE or otherwise or how liquid and vibrant any market activity that
does develop might be.
(ii) Dilution
By approving the acquisition of I&M Bank, the shareholders of CTL will dilute their
holding in the Company. However, their ultimate holding in I&M Bank will remain
undiluted, as they will collectively hold the same percentage of shareholding that they
currently do in the Bank.
(iii) Failure to conclude this Transaction
The conclusion of this transaction is dependent on:
An approval by CTL shareholders to make the Offer to I&M Bank; and
At least 90% of I&M shareholders accepting the Offer.
Besides an enhanced reputational risk for both parties, a failure to conclude this
transaction may result in I&M Bank applying for a direct listing on the NSE and in which
case, CTL shareholders could potentially be faced with a decline in share price and
value of their investment in CTL shares over a period of time.
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PART VIII STATUTORY AND GENERAL INFORMATION

1 Regulatory matters
The approval of the shareholders of CTL must be obtained for the acquisition of I&M Bank
before the Offer is made to I&M Bank's Shareholders. This approval will be sought at the
EGM to be held on Wednesday, February 20, 2013.
The following exemptions and approvals are required for the implementation of the
Acquisition and the issue of the New Shares:
An exemption from the Minister of Finance under Section 53 of the Banking Act
exempting CTL from the provisions of section 13(1) of the Banking Act in connection
with its acquisition and holding of shares in I&M Bank. While the approval has been
granted, it is expected that this exemption will be published in the Kenya Gazette
following the approval of the Offer by the shareholders of I&M at its EGM.
Approval of the CMA, pursuant to the Fourth Schedule of the Capital Markets
(Securities) (Public Offers, Listing and Disclosures) Regulations, 2002, for the issue
and listing of the New Shares. Approval has been granted.
Approval of the NSE for the listing of the New Shares. Approval has been granted.
The Registrar of Companies has approved the proposed change of name from City
Trust Limited to I&M Holdings Limited. It is intended that this change of name will
take effect upon, and subject to, completion of the Acquisition.
Approval from the Competition Authority under the Competition Act, Chapter 504 of
the Laws of Kenya. Approval has been granted.
It is expected that listing of the New Shares will become effective on June 11, 2013.
2 Responsibility Statement
The Directors of CTL whose names appear on page 12 of this Circular accept responsibility
for the information contained in this Circular. To the best of the knowledge and
understanding of the Directors the information contained in this Circular is in accordance
with the facts and does not omit anything likely to affect the import of such information. The
Directors confirm they have taken all reasonable care to ensure that such is the case.
3 The Companys Share Capital
CTLs authorized share capital as at December 31, 2012 stood at KES 50,000,000/- divided
into 10,000,000 ordinary shares of a par value of KES 5/- each.
The intended split will increase the authorized shares from 10,000,000 ordinary shares of a
par value of KES 5/- each to 50,000,000 ordinary shares of a par value of KES 1/- each.
CTLs issued and fully paid-up share capital as at December 31, 2012 stood at KES
28,640,005/- divided into 5,728,001 ordinary shares of a par value of KES 5/- each.
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The intended split will increase the issued and fully paid up shares from 5,728,001 ordinary
shares of a par value of KES 5/- each to 28,640,005 ordinary shares of a par value of KES
1/- each.
Assuming completion of the transaction, the authorized share capital of the Company will be
increased from KES 50,000,000/- divided into 50,000,000 ordinary shares of KES 1/- each to
KES 500,000,000/- divided into 500,000,000 ordinary shares of KES 1/- each by creation of
an additional 450,000,000 ordinary shares of KES 1/- each. This is to pave way for the issue
of 363,722,034 new ordinary shares to I&M shareholders for the acquisition.
Following the issue of the new Ordinary Shares to I&M Bank Shareholders and after the
share split, the issued and fully paid-up share capital will increase from KES 28,640,005/- to
KES 392,362,039/-.
4 Disclosures and Directors Interests
Subject to receipt of acceptances from the holders of not less than 90% in value of
the I&M Bank Shares which are the subject of the Offer, City Trust intends to acquire
the shares from any remaining I&M Bank Shareholders who have not accepted the
Offer (for whatever reason) on the same share exchange terms as are contained in
the Offer under the provisions of section 210 of the Companies Act.
However, if CTL receives acceptances from the holders of less than 90% in value of
the I&M Bank Shares which are the subject of the Offer, the transaction will be called
off, and the acquisition of I&M Bank will not proceed.
In order to eliminate fractional shares arising from the allocation of the New Shares
to I&M Bank shareholders, 2 (two) additional New Shares have been included in the
number of new shares to be issued.
None of the directors of CTL or I&M Bank hold more than 3% of any shares in either
CTL or I&M Bank. The numbers and percentages of shares directly held by directors
in I&M Bank are as follows:
Directors Name
Shares Held in I&M Bank
Sachit Suresh Raja Shah
614,674
2.13%*
Sarit Suresh Raja Shah
614,674
2.13%*
* In addition to this, Mr. Sachit S. Raja Shah and Mr. Sarit S. Raja Shah have an indirect shareholding of
1.30% and 1.32% respectively in I&M Bank.
Upon completion of the transaction, the direct and indirect shareholding in CTL of
Mr.
Sarit
S.
Raja
Shah
and
Mr.
Sachit
S.
Raja
Shah,
will
remain unchanged at 3.45% and 3.43% respectively. As disclosed in Part V of the
Circular, Mr. Sarit S. Raja Shah is a proposed director of CTL.
None of the directors in I&M Bank directly hold shares in CTL.
No payment or other benefit is proposed to be made or to be given to any director of

CTL, I&M Bank or of any other company related to it as consideration, or in
connection with, their retirement from office.
No agreement or arrangement has been made between any director of CTL or I&M
Bank and any other person in connection with, or conditional upon, the outcome of
the Offer.
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No director of I&M Bank has a direct or indirect interest in any contract entered into
by CTL.
No director of CTL has a direct or indirect interest in any contract entered into by
I&M Bank.
The key shareholders of CTL post-completion of the transaction being Minard

Holdings Limited, Tecoma Limited, Ziyungi Limited, and Mnana Limited, have agreed
to lock in 50% of their holdings for a period of 24 months effective from the
completion date. The combined shareholding of these key shareholders aggregates
approximately 60.52% of CTL and 50% lock in upon the successful completion of
this transaction, will result in 30.26% of CTL shares being locked-in, with a resultant
free float of 69.74%.
The names of the proposed directors of CTL post transaction can be found in Part V
on page 34.
Apart from the acquisition of a 55% beneficial shareholding in BCR as described in

Part III of this Circular, there has been no material change in the financial position of
I&M Bank since 31st December 2011, the date of the last balance sheet.
There has been no material change in the financial position of CTL since 31st July
2012, the date of the last balance sheet.
CTL intends to acquire all the I&M Bank Shares and has no present intention of
disposing of them. There is no agreement or arrangement by which any of I&M
Bank's Shares acquired by CTL in pursuance of the Offer will or may be transferred
to any other person.
There is no agreement, arrangement or understanding in existence between CTL or

any person acting in concert with it and any of the directors, past directors, holders
of voting shares or past holders of voting shares having any connection with or
dependence upon the Offer.
CTL has created a sufficient number of Offer Shares for allotment to those I&M Bank
Shareholders who accept the Offer on the basis that 100% of the I&M Bank Shares
are acquired by CTL.
Minard Holdings Limited is a common shareholder of both City Trust and I&M Bank
Limited. However notwithstanding the same, Minard Holdings Limited is not acting in
concert with CTL and it has not given an irrevocable commitment to accept the Offer
in respect of its holding of shares. Further, Minard Holdings has not dealt in the
ordinary shares of CTL during the period of six months prior to the date of this Offer
Document.
Proparco sold 1,300,000 shares which it held in I&M Bank to Ziyungi Limited and
Minard Holdings Limited. The transaction was completed on 2nd January 2013.
DEG has agreed to sell 1,300,000 of the shares which it holds in I&M Bank to
Tecoma Limited and Ziyungi Limited. The transaction shall be concluded before the
Offer Period opens.
CTL intends to continue carrying on the business of I&M Bank, which will be
operated as a trading subsidiary.
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CTL has no plans to introduce major changes in the business of I&M Bank arising
directly from the Offer and it has no plans to liquidate I&M Bank, sell its assets, redeploy its assets or otherwise effect major changes to I&M Bank's operations. The
future development of the business of I&M Bank will be determined by the executive
management in consultation with the board of directors of CTL, acting in the best
interests of the group as a whole.
The board of directors of I&M Bank will be streamlined in a manner consistent with
the operation of I&M Bank as a wholly-owned subsidiary of CTL. No changes to
management and employees of I&M Bank are expected to be made as a direct result
of the Offer.
No service agreements have been entered into by CTL.
The issue of the Offer Shares as consideration for the exchange of the I&M Bank
Shares will be implemented in full in accordance with the terms of the Offer without
regard to lien, right of set-off, counterclaim or other analogous rights to which CTL
may otherwise be or claim to be entitled as against the holder.
In accordance with the disclosure requirements for additional issues under paragraph
28(a) of the Fourth Schedule of the Capital Markets (Securities) (Public offers, Listing
and Disclosures) Regulations 2002:
o
the Company declares that the annual statements of the company for the
year ended 31st July 2012 have been audited and received an unqualified
opinion; and
the Companys auditors, Deloitte, have issued a statement which states that
all circumstances regarding the issue of the New Shares known to them
which could influence the evaluation by investors of the assets, liabilities,
financial position, results and prospects of the Company are included in the
Circular. A copy of their statement is attached in Appendix 3 on page 61.
5 Advisers' Consents
Dyer & Blair Investment Bank, Kaplan & Stratton Advocates and Deloitte have given and
not withdrawn their consent to the issue of this Circular with the inclusion herein of their
reports and names, and the reference thereto, in the form and context in which they
appear respectively.
6 Transaction Costs
The fees payable by the Company in respect of the transaction are shown below:
PARTICULARS
ROLE
CMA & NSE Fees

Dyer & Blair Investment Bank
Kaplan & Stratton Advocates
Deloitte
Miscellaneous
Regulators
Independent Advisor
Legal Advisor
Auditors
TOTAL
GROSS AMOUNT
(KES)
22,403,322
5,220,000
2,320,000
58,000
500,000
30,501,322
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7 Governing Law
This Circular shall be governed by and construed in accordance with the laws of the Republic
of Kenya.
8 Documents Available for Inspection
Copies of the following documents are available for inspection at CTLs registered office on
any weekday during normal working hours from 10.00 am January 22, 2013 until 4.00 pm
on February 19, 2013:
A copy of the proposed Offer to be made by CTL to the shareholders of I&M Bank
CTLs audited financial statements for the five years prior to and including 31st July 2012
I&M Banks audited financial statements for the five years prior to and including 31st
December 2011
I&M Banks unaudited, published financial statements for the 9-months period ending
30th September 2012.
A copy of the approval by the CMA relating to the issue and listing of the New Shares.
A copy of the approval by the NSE relating to the listing of the New Shares
A copy of the proposed new Articles of Association of CTL
A copy of the Independent Advisers opinion on Fairness of the Acquisition Value and on
the Transaction, as already included in this Circular
A copy of the Auditors' Statement as already included in this Circular
A copy of Deloittes report on the examination of the prospective financial information of
CTL Limited and its Subsidiary I&M Bank Limited as at 31st December 2011
A copy of Dyer and Blairs independent valuation report on I&M Bank dated 23rd October
2012
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PART IX EGM NOTICE

CITY TRUST LIMITED
Incorporated in Kenya on 16th August 1950
under the Companies Act (chapter 486 of the Laws of Kenya)
(Registration Number C. 7/50)
NOTICE OF EXTRAORDINARY GENERAL MEETING
NOTICE IS HEREBY GIVEN that an EXTRAORDINARY GENERAL MEETING of the

Company will be held at 10:00 am on Wednesday February 20, 2013 at the Deloitte Place,
Waiyaki Way for the purpose of considering and if thought fit, passing the Ordinary and
Special Resolutions set out below.
Ordinary Resolutions
(1) Approval of the Offer
That the Directors be and are hereby authorised to make an offer to the
shareholders of I&M, to acquire all the shares of I&M Bank Limited which are not
presently held by the Company in exchange for the issue of fully paid shares in the
Company (the "Offer").
(2) Conditions of Effectiveness and Effective Date
That the following resolutions shall come into effect upon, and subject to, the
acquisition of not less than 90% of the shares of I&M Bank Limited which are not
presently held by the Company in accordance with the Offer. The date of completion
of such acquisition pursuant to the Offer is referred to in these resolutions as the
Effective Date.
(3) The Share Split
That, with effect from the Effective Date, the Companys existing 10,000,000
ordinary shares of KES 5 each shall be split into 50,000,000 ordinary shares of KES 1
each.
(4) Increase in Authorised Share Capital
That, with effect from the Effective Date, the authorised share capital of the
Company be increased from KES 50,000,000 divided into 50,000,000 ordinary shares
of KES 1 each to KES 500,000,000 divided into 500,000,000 ordinary shares of KES 1
each by creation of an additional 450,000,000 ordinary shares of KES 1 each, such
additional Shares to rank pari passu in all respects with the existing issued and
ordinary shares of KES 1 each in the share capital of the Company.
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(5) Allotment and issue of New Shares

That the Directors be and are hereby authorised to allot and issue 363,722,034
ordinary shares of KES 1 each credited as fully paid to the shareholders of I&M Bank
Limited in exchange for the transfer of their shares in I&M Bank Limited to the
Company in accordance with the terms of the Offer.
Special Resolutions
(1) Change of Name
That, with the approval of the Registrar of Companies, the name of the Company be
changed to I&M Holdings Limited with effect from the Effective Date.
(2) Proposed amendment to the Companys Memorandum of Association
That the Memorandum of Association of the Company be amended:
(a)
by abandoning the objects set out in paragraphs (a) to (f) and paragraph (j)
of clause 3 of the Memorandum of Association;
(b)
by adopting the following objects as paragraphs (a) and (c) of clause 3 of the
Memorandum of Association:
(c)
(a)
To act as an investment holding company and to co-ordinate the

business of any companies in which the Company is for the time being
interested, and to acquire (whether by original subscription, tender,
purchase, exchange or otherwise) the whole of or any part of the
stock, shares, debentures, debenture stocks, bonds and other
securities issued or guaranteed by anybody corporate constituted or
carrying on business in any part of the world or by any government,
sovereign ruler, commissioners, public body or authority and to hold
the same as investments, and to sell, exchange, carry and dispose of
the same.
(c)
To carry on any other trade, business or activity whatsoever and to do

anything of any nature which can, in the opinion of the Directors of
the Company, be advantageously or conveniently carried on by the
Company in connection with, as ancillary to or independently of any of
its businesses."
by re-lettering the existing paragraph (g) of clause 3 of the Memorandum of

Association as paragraph (b) and by re-lettering the subsequent existing
paragraphs as paragraphs (d) to (w).
(3) Proposed adoption of new Articles of Association

That the new Articles of Association of the Company in the form of the final draft
presented to the meeting and initialled for the purposes of identification by the
Chairman be and are hereby adopted as the Articles of Association of the Company
in substitution for and to the exclusion of the present Articles of Association.
By order of the Board

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Signature: [***]
Name: [***]
Company Secretary
[**Date**]
A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend
and vote on his behalf.
A proxy need not be a member of the Company.
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PART X APPENDICES
1. Independent Opinion on Fairness of the Transaction Value
by way of a Share Exchange Offer
October 23, 2012
The Board of Directors of City Trust Limited
Deloitte Place, Waiyaki Way,
Muthangari,
Nairobi.
Dear Sirs,
INDEPENDENT OPINION ON FAIRNESS OF VALUE PAYABLE BY CITY TRUST
LIMITED (CTL) FOR ACQUISITION OF 92.72% OF ALL THE OUSTANDING
SHARES IN I&M BANK LIMITED (I&M BANK) NOT ALREADY HELD BY CITY
TRUST BY WAY OF A SHARE EXCHANGE OFFER
City Trust Limited wishes to acquire all the shares in I&M Bank that it does not already own,
and has engaged Dyer & Blair Investment Bank Limited (we or us) to:
Review and update the internal valuations of CTL and I&M Bank based on managements
projections for I&M Bank (Management);
Provide a review opinion on whether the valuation is fair and reasonable in relation to
the consideration being offered to I&M Bank shareholders;
Review the calculation of the number of new CTL shares to be allotted and issued to
I&M Bank shareholders, and hence the share swap ratio.
Limitations of Review
The assignment was undertaken solely and expressly on the basis that we shall not be liable
for any direct, indirect or consequential loss for damage suffered by any party arising from
the fulfillment of these transactions.
This report is intended solely for the use of the Board of Directors of CTL, the shareholders
of CTL, the Capital Markets Authority of Kenya (CMA) and the Nairobi Securities Exchange
(NSE) in connection with the acquisition of all the outstanding I&M Bank shares not
already held by CTL, and hence may not be reproduced or used for any other purposes
without our prior written consent.
This report does not constitute a recommendation to any ordinary shareholder of CTL as to
how to vote at any meeting relating to the proposed acquisition or on any matters relating
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to it, nor as to the acceptance of the transaction. Therefore, it should not be relied upon for
any other purpose.
We assume no responsibility to anyone if this review opinion is used or relied upon for
anything other than its intended purpose.
Forecasts relate to future events and are based on assumptions that may not remain valid
for the whole of the relevant period. Consequently, this information cannot be relied upon to
the same extent as that derived from audited financial statements for completed accounting
periods. We express no opinion as to how closely actual results will correspond to those
forecasts.
Our report holds true as at the date of issue of the report, and based
economic and regulatory conditions and the assumptions made thereon
information made available to us by CTLs management up to the date
Accordingly, we are under no obligation to update this report because
transactions occurring subsequent to the date of this report.
on
as
of
of
the current
well as the
this report.
events and
Independence
We confirm that Dyer & Blair Investment Bank Limited does not hold any shares in CTL,
directly or indirectly. We have no interest, direct or indirect, beneficial or non-beneficial, in
CTL or the outcome of the transaction.
Comments on the transaction
Upon completion of the transaction, CTL intends to continue carrying on the business of I&M
Bank, which will be operated as a trading subsidiary. This we believe is a much more
efficient structure. For this purpose, CTL will also change its name to I&M Holdings limited.
Additionally in relation to this transaction, CTL has no intention to discontinue employment
of any of the existing employees of I&M Bank or its subsidiaries.
The commercial justification for this transaction is to get CTL shareholders to own the main
asset, the Bank, and unlock their shareholding value. By CTL becoming a holding company,
the shareholders get a more capitalized and regional bank. The process also makes it easier
for I&M Bank to list in the NSE and unlocks liquidity for both CTL and I&M Bank
shareholders.
While CTL owns up to 7.28% of I&M Bank, the Bank has no direct or indirect shareholding
in CTL. Similarly none of the directors of I&M Bank own shares in CTL. Minard Holdings
Limited is the only common shareholder of both CTL and I&M Bank Limited. However,
following completion of the transaction, the direct and indirect shareholding in CTL of the
proposed director, Mr. Sarit S. Raja Shah remain unchanged at 3.43%. Similarly, the direct
and indirect shareholding in CTL for Mr. Sachit S. Raja Shah, a current director in I&M Bank
but not proposed to be a director in CTL will also remain unchanged at 3.43%. All the CTL
directors have expressed their intent to accept the offer in respect to their own beneficial
direct and indirect holdings in CTL.
And as at the date of the offer, no service contracts exist with any director or proposed
director of I&M Bank or any of its subsidiaries.
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Industry Outlook
The Banking Sector has continued to grow from strength to strength; Net Assets in
the sector grew from KShs 1.68 trillion in December 2010 to KShs 2.02 trillion in
December 2011, a 20.4% increase. Non-performing loans which are a key indicator
of the health of the sector decreased by 8% from KShs 57.6billion in December 2010
to KShs 53.0 billion in December 2011.
Although declining, inflation posed a huge challenge to the banking sector having
risen to 18.93% in December 2011 from 3.97% in December 2010. Such an increase
in inflation was attributed increases in food and oil prices. Kenyas high current
account deficit contributed to uncertainty with respect to the value of the Shilling.
The Kenyan Shilling lost significant ground to world currencies last year partly due to
Euro Zone crisis as importers demanded more US dollars as a consequence.
The Central Bank of Kenya responded by raising the Central Bank Rate to 18% from
10% and intervening in the local currency markets in order to stabilise the Shilling.
This had significant implications for the banking sector as it raised the cost of
borrowing and requiring a change in its asset mix, recapitalization, mobilizing new
and cheaper deposit channels, opening new branches and more aggressive
marketing.
The rise in interest rates would inevitably result in an increase in non-performing

loans. To cope with potential increase, the Central Bank together with the Ministry of
Finance and Kenya Bankers associations put together a package to help mitigate the
effects which included extension of loan repayments periods and caps on the
increase in installment repayments to a maximum of 20%.
Capital Ratios have deteriorated over the past year across the sector and a good number of
the banks continue to push towards increased capitalization. Select banks have received a
boost to their capital base from Development Finance Institutions in the form of Tier 1 and
Tier 2 capital while others have received debt financing specifically for lending onto SMEs.
Besides, a stream of rights issues is in the pipeline for this year.
The sector continued to register growth in the first two quarters up to June 2012.
Credit advances for the sector grew by KShs 83.8 billion to KShs 1.29 trillion, mainly
in 10 sectors with personal and household sector leading followed by trade,
manufacturing, real estate, transport and communication to name a few.
Deposits on the other hand, accounting for 75.5% of the funding liability rose by
11% from KShs 1.49 trillion in December 2011 to KShs 1.66 trillion in June 2012.
CBK attributes this growth to continued branch expansion, remittances and receipts
from exports. The number of branches increased by 22 over the three months April
to June 2012 to stand at 1,196.
The sector also registered improved capital levels in the second quarter with total
capital growing at 19% from KShs 248.3 billion in December 2011 to KShs 294.3
billion by June 2012. Total capital to total risk-weighted assets stood at 20.3% while
core capital to total risk weighted assets declined from 18.1% in December 2011 to
17.7%.
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Constraints in loan uptake by the private sector due to the higher cost of funds has
consequently led to an increase Gross non-performing loans (NPLs) which rose by
7% between April and June to KShs 57.3 billion. For the first six months of 2012, the
ratio of gross NPLs to gross loans increased from 4.3% in March to 4.5% in June,
where it closed in December 2011.
The rates have since declined and the CBR rate cut to 13% in September 2012 from
a high of 18% in December 2011. This is expected to have a gradual effect on the
rate cuts by the Banks and hence the industry is still carrying a higher risk of Nonperforming loans.
The sectors profits before tax for January to June 2012 were KShs 53.2 billion or
close to 60% of KShs 89.5, last years total profit for the sector.
Most banks reported commendable growth in profits for the half year and are
expected to sustain this growth momentum over the next half.
Overall the sector will record continued profitability despite the challenges posed earlier by
the high rates. Declining inflation, stability in the Kenya shilling and the downward revision
of lending rates are amongst the major factors that will drive growth in the short-to medium
term. The growth will further be supported by the sectors increased rollout of the agency
model and other cost effective delivery channels, recapitalization, and increased regional
presence.
Definition of Fair and Reasonable
An offer is generally fair and reasonable if the consideration is equal to or greater than the
value of the CTL share being the subject of the transaction.
In our review of the fairness of the valuation and the transaction, we have considered the
quantitative as well as the qualitative issues surrounding the particular offer. An offer may
be fair and reasonable if all significant factors have been considered in arriving at the
consideration to be offered.
It should be noted that this review opinion does not purport to cater for individual
shareholders positions, but rather the general body of shareholders. A shareholders
decision regarding the fairness and reasonableness of the offer may be influenced by his or
her particular circumstances. Should a shareholder be in doubt, he or she should consult an
independent adviser as to the merits of the offer, considering his or her personal
circumstances.
Sources of Information Used
Our report is based on the information provided to us by the Management, who performed a
due diligence exercise on I&M Bank. Management is therefore deemed solely responsible for
the integrity of data and information submitted to us. We have relied on the following
information in order to ascertain the value of the shares on both CTL and I&M Bank:
1. Share exchange ratio workings for CTL;
2. Valuation workings for I&M Bank- adopted from Dyer & Blairs independent valuation
report dated 23rd October 2012;
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3. Audited financial statements for the year ending December 31,2011 for I&M Bank,
and July 31 2011 for CTL;
4. Shareholding structures for both I&M Bank and CTL as at 31st March 2012; and
5. Discussions with Management and their advisers.
Conditions Precedent
In order for the transaction to be effective, the following conditions need to have been
fulfilled prior to completion:
The share exchange offer is presented and accepted by 90% of I&M Bank
shareholders
Acquisition of 92.72% of shares in I&M Bank by way of a Share Exchange Offer
I&M Bank provides an extensive range of banking, financial and related services and is a
banking institution licensed by the Central Bank of Kenya, under the Banking Act (Chapter
488). The Bank has 19 branches in Kenya, and has a presence in Tanzania, Rwanda and
Mauritius through its Subsidiaries and Associate, respectively.
In 2011, I&M Bank is ranked among the top 10 banks in Kenya according to RSM Ashvirs
report, Kenyas Banking Sector Performance 2011. It ranks 9 in total assets, 7 in
profitability, 5 in Return on Assets and 2 in efficiency. Overall and based on 10 key
performance indicators, the bank is ranked 4th out of the 43 banks included in the report.
As at September 30, 2012 being the date of our review, the registered shareholding in I&M
Bank was as follows:
Shareholders Name
Tecoma Limited
Ziyungi Limited
DEG
Proparco
City Trust Limited (Listed on the NSE)
I&M ESOP Trust
Other shareholders (approx. 104)
Total Issued Shares
No. of Shares
4,475,759
4,008,740
4,000,000
4,000,000
3,100,000
2,575,000
2,097,458
100,000
4,445,496
28,802,453
% Share
holding
15.54%
13.92%
13.89%
13.89%
10.76%
8.94%
7.28%
0.35%
15.43%
100.00%
I&M Bank Prospects for the next twelve months are advised from its strong financial
performance and commendable industry positioning. The consolidated balance sheet size of
the Bank recorded a compounded annual growth rate (CAGR) of 26% in total assets since
2009, with a 30% CAGR for advances and a CAGR of 24% in customer deposits. In 2011
alone, the Group balance sheet size recorded a growth of 24% and crossed the KShs 100
billion mark to reach KShs 108 billion. Profit before tax has grown at a CAGR of 41% from
2009 to 2011. This puts the bank amongst the top performers in terms of sustained growth
in profitability. The operating profit margin also improved from 15% to 28% while the net
profit margin increased from 36% to 44%.
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City Trust Limited
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The Bank has expanded beyond Kenya to become a regional player, with the acquisition of
50% shareholding in Bank One, Mauritius, 55% shareholding in I&M Bank (T) Limited,
Tanzania and 55% in BCR, Rwanda. Non-Kenyan operations in 2011 accounted for about
28% of the Groups assets and 11% of its Profit Before Tax.
In 2011, Bank One recorded a 61% growth in PBT an equivalent of KShs 484 million and
contributed 10% to the consolidated group profitability. The Tanzanian entity achieved a 7%
growth in PBT to KShs 296 million and contributed 1% of the groups profitability. BCR
Rwanda, the recent acquisition will feature in the 2012 financials going forward.
The Bank has potential for continuously registering further growth owing to its high
efficiency level, quality of assets, and expansion in branch network, product innovation and
diversity.
Procedures used for the Review of the Share Exchange ratio

In arriving at our opinion in respect of the ordinary shares of CTL and I&M Bank, we have
inter alia, considered the following:
1. The valuation workings for I&M Banks as prepared by Dyer & Blair - to arrive at an
average price range of between KShs 1,363 and KShs 1,432 per share
i.
The information available and assumptions made in arriving at the valuation;
ii.
Market information such as the price earnings ratio of comparable companies
and the appropriate discount rate applied for unlisted companies;
iii.
Financial assessment by the Management of CTL and I&M Bank to the Offer
and their market intelligence and knowledge of the business in preparation of
the forecasts so used;
iv.
Review of the assumptions used for the economic, regulatory and market
conditions in arriving at the valuations;
v.
Review of the reasonability of the representations made by Management.
2. The valuation of CTL based on the 7.28% shareholding in I&M Bank as at March 31
2012 and the additional assets in CTL as at that time in the computation of the share
exchange ratio;
3. Review of the reasonableness of the share split workings used to determine the
appropriate number of new shares to be issued by CTL to I&M Bank shareholders in
relation to the offer.
The share exchange ratio and the resultant new shares to be issued to I&M Bank
shareholders after CTLs share split
The share exchange ratio was determined as follows;
1. The valuation of I&M Bank was adopted as the valuation done by Dyer & Blair as at
October 2012.
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City Trust Limited
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In spite of the price of I&M Bank used, and given that the valuation is reasonable
and acceptable, the share exchange ratio would remain the same as long as CTL
percentage stake of 7.28% in I&M Bank is held constant.
Based on this assumption, the price range used for I&M Bank is between KShs 1,363
and KShs 1,432 per share. The price range was arrived at after undertaking a
valuation of I&M Bank and its affiliate and subsidiaries in Mauritius, Tanzania and
Rwanda. The valuation approach adopted considers the following valuation
methodologies;
(i) Income Approach , under the Discounted Free Cash flow to Equity (DCF) and
Capitalization of Earnings;
(ii) Price Multiples , under the Price Earnings Multiple (PE) and the Price to Book
Value (PBV)
(iii) Volume Weighted Average Price
on the OTC market for transaction
completed in 2012
The fair value reasonably considers all avenues of growth for I&M bank and is a
summation of the estimated values of each business segment of the group. Every
bank in the group was valued separately under each of these approaches. The
estimated value of each of the subsidiary banks were then consolidated using the
Sum-of-The Parts approach, where applicable and then weighted under three options
by varying the assigned weights between the income and the price multiples
approaches while maintaining the OTC weight as 10%. The resultant range is as
illustrated below.
Option 1
Option 2
Option 3
Income Approach Weight
45%
40%
50%
Price Multiples Weight
45%
50%
OTC Price Weight
10%
10%
10%
1,362.70
1,390.60
1,431.80
Value of I&M in KShs per Share
40%
2. Before the transaction takes place, CTL is proposing to split its shares such that each
shareholder gets five (5) ordinary 1/- shares for every one (1) ordinary 5/- share
held (or a split of 5:1).
3. Given the price range of KShs 1,363 to KShs 1,432 per share for I&M Bank against
28.8 million issued and fully paid up shares, the enterprise value of I&M Bank is
determined to range between KShs 39.3 billion and KShs 41.2 billion. Using this as
the basis, and taking into consideration CTLs stake of approximately 7.28% in I&M
Bank, adding the other assets of CTL and a share split of 5:1, the enterprise value
for CTL translates to a range between KShs 2.87 billion and KShs 3.01 billion i.e. a
range of KShs 100.1 to 105.1 a share.
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City Trust Limited
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We then divided I&Ms enterprise value by that of CTL to arrive at a share swap ratio
of 13.62 shares of CTL for every 1 share in I&M Bank as per the table below;
Option 1
Particulars
Figures
(post-split)
Key
Total number of Issued and

Paid up Shares in I&M
Number
Value per Share (A)
Option 2
Option 3
Figures
(post-split)
Figures
(post-split)
28,802,453
28,802,453
28,802,453
Kshs
1,363
1,391
1,432
I&M - Enterprise Value
KShs
39,250,404,278
40,053,829,540
41,239,361,800
CTL's shareholding in I&M

Bank (number of Shares)
Number
2,097,458
2,097,458
2,097,458
CTL's existing shareholding

in I&M Bank
7.28%
7.28%
7.28%
CTL's Enterprise Value
Kshs
2,866,202,981
2,924,871,927
3,011,443,675
No of Issued and Paid Up

Shares in CTL
Number
28,640,005
28,640,005
28,640,005
Value per Share
KShs
100.08
102.13
105.15
13.62
13.62
13.62
(B)
Share Swap Ratio (A/B)
4. Based on the swap ratio, the resultant number of new shares to be issued and the
total number of shares to be held under CTL as a holding company are as follows;
Particulars
Key
Figures (post-split)
Total number of Issued and Paid up Shares in I&M
Number
28,802,453
Less: Shares already held by CTL in I&M Bank
Number
2,097,458
Balance I&M Bank shareholders qualifying for SWAP
Number
26,704,995
Key
Figures (post-split)
New shares to be issued to I&M Shareholders
Number
363,722,034
CTL Outstanding shares
Number
28,640,005
Total Issued shares in HoldCo
Number
392,362,039
Particulars
For the acquisition by CTL of 26,704,995 being 92.72% of the issued ordinary shares in I&M
Bank not already owned by CTL the share exchange ratio is computed at 13.62 shares in
CTL for every 1 share in I&M Bank. Going by this ratio, CTL is to offer up to 363,722,034
new ordinary shares of KShs. 1/- each to I&M Bank shareholders. The total outstanding
shares in CTL thus amount to 392,362,039 shares of KShs 1/- each post the transaction.
CTLs original shareholders holding increases marginally to 7.30%. Assuming that the
shareholding structure of I&M as at September 30, 2012 remains unchanged until
completion, the new shareholding structure of the holding company will be as follows;
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City Trust Limited
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Pre- Transaction
Post- Transaction
No. of Shares
in CTL (the
Holding
% Share
com pany)
holding
62,320,613
15.54%
Shareholders Name
No. of
Shares in
I&M Bank
4,475,759
% Share
holding
15.54%
4,008,740
13.92%
54,599,039
13.92%
Tecoma Limited
4,000,000
13.89%
54,480,000
13.89%
Ziyungi Limited
4,000,000
13.89%
54,480,000
13.89%
DEG
3,100,000
10.76%
42,222,000
10.76%
Proparco
2,575,000
8.94%
35,071,500
8.94%
City Trust Limited
2,097,458
7.28%
28,640,005
7.30%
100,000
0.35%
1,362,000
0.35%
4,445,496
15.43%
60,547,652
15.43%
28,802,453
100.00%
392,362,039
100.00%
I&M ESOP Trust

Other shareholders
(approx. 104)
Total Issued Shares
Review Opinion
Based on the review performed, and after taking into consideration all the financial
considerations, foregoing assumptions, current economic and regulatory environment and
the valuations working using projections by the management, nothing has come to our
attention that the proposed acquisition of 92.72% in I&M Bank by CTL by way of a share
exchange offer is not fair and reasonable.
In respect of this, our review opinion is that the valuation and consideration thereon is fair
and reasonable provided the above pre-completion conditions have been satisfied, all
regulatory approvals are sought and relevant conditions in the share exchange offer, have
been satisfied.
Consent
We hereby give our consent to the inclusion of this opinion and the inclusion of the
references of our report in the form and context in which it appears in the circular to the
shareholders of CTL.
Dyer & Blair Investment Bank

October 23, 2012
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City Trust Limited
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2. Directors Declaration
The Capital Markets Act

(Chapter 485A of the Laws of Kenya)
Acquisition of I&M Bank Limited by City Trust Limited By Way of Share Exchange
Application by City Trust Limited for approval to issue and list additional 363,722,034
ordinary shares
Declaration under paragraph 17(2) of the Fourth Schedule to the Capital Markets
(Securities) (Public Offers, Listing and Disclosures) Regulations, 2002
We the undersigned, being duly authorised by the directors of City Trust Limited, hereby
declare that all information stated in the application submitted to the Capital Markets
Authority in regard to the above matter on June 20, 2012 and the statements contained in
this Circular to be issued in connection with this matter are correct, and neither the Board of
Directors minutes, audit reports nor any other internal documents contain information which
could distort the interpretation of this Circular.
Signed for the Board of Directors:
Mr. Anil Raja
Mr. Daniel Ndonye
Chairman
Director
[*Date*]
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City Trust Limited
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3. Statement from Auditors

[Auditors logo]
18 January 2013
The Directors,
City Trust Limited,
Deloitte Place, Waiyaki Way,
Muthangari,
Nairobi.
Auditors Statement on information circular to shareholders of City Trust Limited

on the Proposed issue of 363,722,034 new ordinary shares
As the auditors of City Trust Limited (the Company), we confirm that, other than as
disclosed in the circular to the shareholders dated 21 January 2013 there are no
circumstances regarding the proposed issue of 363,722,034 new ordinary shares which
would otherwise influence the evaluation by investors of the assets, liabilities, financial
position and prospects of the Company that has come to our notice as auditors of the
Company.
On the basis of the audit of the financial statements of the Company for the period 31July
2012, and not subsequently supplemented by any additional audit procedures, we confirm
that to the best of our knowledge and belief, and pursuant to section 28 of the Fourth
Schedule of the Capital Markets (Securities) (Public Offers, Listings and Disclosures)
Regulation 2002, that all circumstances regarding the proposed issue of the new ordinary
shares which could influence the evaluation by investors of the assets, liabilities, financial
position and prospects of the Company known to us as the auditors, are included in the
circular to shareholders.
Yours faithfully,
Certified Public Accountants (Kenya)

Nairobi
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City Trust Limited
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4. The OTC Market Prices for I&M Bank Shares

OTC transactions for I&M Bank shares and the volume weighted average price (VWAP) for
the last 18 month period between July 2011 and December 2012:
Item no.
1
2
3
4
5
6
7
8
Date
01-Aug-11
25-May-11
25-May-11
25-May-11
16-May-11
04-Mar-11
18-Jan-12
01-Sep-12
Total
Volume
1,000
500
1,000
1,000
5,300
2,000
2,000
5,000
17,800
2012 Average price
2012 VWAP
Price
1,050.00
1,000.00
1,050.00
1,000.00
953.00
935.00
1,050.00
1,100.00
1,075.00
1,085.71
Total Market Capitalization as at December 2012
Turnover
1,050,000
500,000
1,050,000
1,000,000
5,050,900
1,870,000
2,100,000
5,500,000
18,120,900
31,271.2
The average prevailing trading prices for I&M Bank shares have been provided as the
average weighted price for the transactions during 2012. The market is characterised by
high demand for the shares and hardly any supply. Judging by the volumes in all the trades
since inception, the OTC Market has not moved any significant block. The eight transactions
have a total volume of 17,800 shares moved at a turnover of KShs 18.1 million.
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City Trust Limited
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5. Notes
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City Trust Limited
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6. Proxy Form
I/We
CDS A/C No
of (address)
being member(s) of City Trust Limited, hereby appoint
of (address)
or failing him the duly appointed Chairman of the

meeting to be my/our Proxy, to vote on my/our behalf at the Extraordinary General Meeting
of the Company to be held at 10.00am on Wednesday February 20, 2013 at Deloitte
Place, Waiyaki Way or at any adjournment thereof.
As witness to my/our hands this
___________ day of _______________2013
Signature(s)
Notes:
1. This Proxy is to be delivered to the Company Secretary at City Trust Limited, Deloitte
Place, Waiyaki Way, Muthangari, Nairobi.
2. A Proxy form must be in writing and in the case of an individual shall be signed by
the shareholder or by his attorney, and in the case of a corporation the proxy must
be either under its common seal or signed by its attorney or by an officer of the
corporation.
Page | 64

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CITY TRUST LIMITED

(Incorporated in the Republic of Kenya under the Companies Act

THIS CIRCULAR IS DATED JANUARY 21, 2013

City Trust Limited

City Trust Limited

Timetable Of Key Events .................................................................................................................... 4

Transaction Advisers ........................................................................................................................... 5

Part II Chairmans Letter ................................................................................................................................ 9

Acquisition Of Shares In I&M Bank Limited..................................................................................... 9

Rationale For Undertaking This Acquisition ................................................................................... 10

Principal Terms Of The Acquisition ................................................................................................. 12

Proposed Share Split ......................................................................................................................... 14

Statutory Approvals & Related Information .................................................................................. 14

Extraordinary General Meeting (Egm) ............................................................................................ 15

Recommendations And Voting Intentions ..................................................................................... 15

Part III I&M Bank Limited............................................................................................................................. 16

Independent Opinion on the Share Exchange Offer .................................................................... 51

Directors Declaration ....................................................................................................................... 60

Statement from Auditors .................................................................................................................. 61

The OTC Market Prices for I&M Bank Shares ............................................................................... 62

Proxy Form ......................................................................................................................................... 64

City Trust Limited

10:00 a.m. on Monday, February

10:00 a.m. on Wednesday,

Press Announcement of outcome of EGM

Thursday, February 21, 2013

Procedure below is dependent on the approval of the transaction by CTL

Tuesday, March 5, 2013

Friday, April 19, 2013

Friday April 26, 2013

Proposed Register Closing Date for the share split

Tuesday, May 28, 2013

Conclusion of mandatory acquisition of any shares held Monday, June 3, 2013

City Trust Limited

020 324 0122

City Trust Limited

The proposed acquisition of shares in I&M Bank not presently

The Alternative Investment Market Segment of the Nairobi

Bank One Limited, a company incorporated in the Republic of

Banking Act (Chapter 488 of the Laws of Kenya).

Banque Commerciale du Rwanda Limited, a company

The National Bank of Rwanda, the Central Bank of Rwanda.

The board of directors of either CTL or I&M Bank as indicated.

The Bank of Mauritius, the Central Bank of Mauritius.

The Bank of Tanzania, the Central Bank of Tanzania.

Ciel Investment Limited, Mauritius.

This Circular dated January 21, 2013, together with its

The Capital Markets Authority of Kenya, a statutory regulatory

Capital Markets Act

The Capital Markets Act (Chapter 485A of the Laws of Kenya).

The Central Bank of Kenya, a statutory corporation established

Chief Executive Officer.

City Trust Limited

The Companies Act (Chapter 486 of the Laws of Kenya).

DEG - Deutsche Investitions Und Entwicklungsgesellschaft mbH,

Extraordinary General Meeting.

Nederlandse Financierings-Maatschappij voor

I&M or I&M Bank

I&M Bank Limited, a company incorporated under the

I&M Bank Group

I&M Bank and its Subsidiaries and Associates.

I&M Bank Shares

I&M Bank (T) Limited, a company incorporated in the Republic