Barclays turns to parent for cash injection

Barclays Bank Kenya is set to borrow Sh4 billion from its London-based parent Barclays Plc to meet higher capital adequacy ratios set by the Central Bank of Kenya.

The bank was, as of June, 1.2 percentage points above the CBK minimum ratio of total capital to risk weighted assets (loans) prompting the search for new funds that will expand its capacity to lend more.

“We plan to take a loan from our parent. This will be cheaper compared to issuing a bond in the local market,” said Yusuf Omari, Barclays chief financial officer.

“The money is to supplement our tier II capital,” he said, adding that Barclays is likely to incur an interest charge of between three and four per cent on the debt.

The interest will be based on the London Interbank Offered Rate (Libor), with Barclays Plc adding a margin on the global base rate.

International loans are cheaper compared to domestic debt going by the rates quoted on recent corporate bond issues which have ranged at about 13 per cent, reflecting premiums of 4.6 per cent on current T-Bill yields.