Consolidated Bank’s core capital to total deposit ratio, which determines the bank’s capacity to collect deposits from the public was at 8.1 per cent at end of March, slightly above the minimum statutory rate of 8 per cent.
Consolidated Bank has received approval from the Capital Markets Authority (CMA) to issue a Sh4 billion bond to help boost its capital levels. The bank has been operating on thin capital adequacy ratios, slowing its growth plans and keeping it on the regulator’s radar.
Consolidated Bank’s core capital to total deposit ratio, which determines the bank’s capacity to collect deposits from the public was at 8.1 per cent at end of March, slightly above the minimum statutory rate of 8 per cent.
“The approval will enable the lender to recapitalise and support growth of customer deposits and its loan book,” said the CMA in a statement.
Changing its status
The lender approved the bond issue at an extra ordinary general meeting at which it passed a resolution changing its status from a private to a public company.
Consolidated Bank has been pursuing various capitalising options including seeking funds from the government, which is its majority shareholder.
Budget estimates tabled in parliament however indicated that the Treasury had rejected a Sh1 billion recapitalisation call for the State-owned bank.
There have also been long-standing plans to privatise the financial institution – which is 51 per cent owned by the Deposit Protection Fund of the Central Bank of Kenya, while the rest is held by parastatals.
The investment secretary, Ms Esther Koimett, had earlier told the Business Daily that privatisation of companies including Consolidated Bank had been held back by bureaucracy.
The sale of shares by the government would open the bank to more shareholders from whom it could raise funds.
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