He replaces Sammy Itemere –who was recently appointed principal secretary for Broadcasting and Telecommunications— having left the bank in February last year.
The executive changes at the bank are linked to the purchase of a majority stake by Mwalimu Sacco, which acquired a 51 per cent stake from ECB’s founder Naushad Merali, and which intends to further raise its interest in the lender to 75 per cent.
Mr Gitonga joins the bank at a time when it has sunk into losses, shackled by a constrained capital base, forcing it to raise new funds from shareholders.
“The board and the entire ECB family welcomes Mr Gitonga to the organisation and wishes him well as he drives the bank in achieving its strategic objectives,” board chairman Dan Ameyo said in a statement.
Mr Gitonga said his key agenda will be to re-align the bank’s credit portfolio, which has dented shareholders’ capital, from loan loss provisions and impairments while developing new business.
ECB’s net assets or shareholder funds dropped to Sh15.8 billion in September from Sh16.8 billion in June, a shrinkage of about Sh113 million.
“We have set our eyes on achieving tier two status in the next four years with a clear focus on the growing segments of the economy, especially in retail and SME Banking,” Mr Gitonga said in a statement.
The new CEO joins ECB from HF Group where he was in charge of business operations, responsible for several functions including IT, marketing and business development.
Mr Gitonga holds a first class honours Bachelor of Science degree and a Masters of Business Administration in Strategic Management from the University of Nairobi.
ECB recently moved to raise Sh500 million through a rights issue to shore up its deteriorating capital adequacy ratios.
A notice ahead of its extraordinary general meeting (EGM) last month proposed an increase in its authorised capital to Sh3.825 billion from the current Sh3.325 billion.
This will be through the sale of 100 million shares at Sh5 each to existing shareholders.
Mwalimu National Holdings, the Sacco’s vehicle used to acquire the bank, has simultaneously launched a fundraising drive through selling 40 per cent of its stake to the Sacco members.
It is expected that some of the funds raised from the Sacco members will go into expanding the business of the Sh2 billion capital bank and also be used to buy an extra 24 per cent stake from some of the bank’s current shareholders.
The bank had thin capital ratios in the third quarter with the total capital to total risk-weighted assets –a measure of its ability to increase lending— staying above the statutory 14.5 per cent by just 0.71 percentage points.
ECB made a net loss of Sh61.8 million in the nine months ended September, reversing a net profit of Sh49 million a year earlier. The performance was driven by a drop in lending and shrinkage in all income streams including interest and fees.