National Bank of Kenya sees share sale over in 2009

* Says prefers local main shareholder

* Expects privatisation process to be concluded in 6 months

By Duncan Miriri

NAIROBI, June 9 (Reuters) - National Bank of Kenya (NBK.NR) expects the sale of its government-held shares to be over by the end of this year and would like a substantial local investor to come on board, its managing director said on Tuesday.

Ranked 10th biggest bank in the east African nation by assets, National is among a host of enterprises the government is seeking to divest in an 8 billion-shilling ($102.7 million) privatisation round.

The government holds a 22.5 percent direct stake in the bank and another 48.05 percent through the state pension fund, National Social Security Fund.

"You can expect minimum six months, so perhaps by the end of this year, we should be reviewing progress," Reuben Marambii told Reuters after the bank's annual meeting, when asked how long the process was expected to take.

"My preferred outcome is a balanced situation where some shares go to the general public, some shares go to a substantial investor," he said.

He said this would make it easy for National to handle problems by consulting one main shareholder, rather than thousands of small investors.

"Of course we would prefer a local one. Foreigners only come when we do not have the required investors," he said.

Kenya's Equity Bank (EQTY.NR) has expressed an interest in acquiring National, dependent on terms of sale that will be laid out by the country's privatisation commission. [ID:nLS595560]

Marambii said National's woes with non-performing loans -- associated with lending to politically connected individuals in former President Daniel Arap Moi's administration -- were firmly behind it.

"That was more than five years ago, therefore that is history. We no longer have problems with non-performing loans," he said.

The managing director, however, added that the bank was feeling some pain from the slowdown of the economy due to drought, last year's post-election violence and the global economic downturn.

"It has affected everybody in the economy and although companies are showing profits, slightly above last year's, they are not according to their projections," he said.

He said it was is too early to quantify how the slowdown would affect National's results.

(Editing by David Clarke and David Cowell)