KCB rights issue to test protocol’s effectiveness

The bank estimates that 25 per cent of its deposit is wholesale deposits which are largely from corporate businesses such as Safaricom and East African Breweries Limited (EABL), which are known to bargain for higher interest rates for their deposits.

Similarly, the bank regional expansion drive has eaten into its bottom line and the new capital is expected to defray some of the cost especially as the new units are yet to break even.

“We also need capital to shore up our regional businesses which are beginning to show positive growth over the last two years”.

The absorption of its mortgage business line Savings and Loan into the bank has provided the bank with a platform to grow its mortgage business through a bigger balance sheet.

The recent review by the government allowing commercial banks to use up to 40 per cent of their core capital for mortgage business is expected to allow the bank to ride on its expanded war chest to grow the business.