Credit Bank is eying Sh4.5 billion fresh capital through a private placement, in the race to comply with the new capital rules that require commercial lenders to have at least Sh3 billion core capital by the end of this month.
The lender, which ended September with core capital of Sh1.23 billion, now needs at least Sh1.77 billion to comply with the new law.
The legislation raised the minimum core capital requirement from Sh1 billion and provides for a gradual increase to Sh10 billion by 2029.
The bank has called an extraordinary general meeting (EGM) on December 19 for shareholders to vote on the proposal to issue up to 45 million ordinary shares to existing and new investors at a price of Sh100 each.
Ahead of the EGM, the lender has received a boost after two key shareholders —ShoreCap III LP and Sansora Group of Companies— committed to the Central Bank of Kenya (CBK) that they are going to inject into Credit Bank Sh1 billion each by the end of this month.
Letters seen by this publication show Sansora Group of Companies CEO Leon Nyachae has written to CBK director of banking supervision making the commitment.
Equator Capital Partners (ECP), the investment manager for ShoreCap III, has also made a similar commitment in writing.
“Our board of directors has recently considered the matter and resolved to invest an additional Sh1 billion in Credit Bank PLC by 31st December 2025,” said Mr Nyachae in the letter.
Further, Sansora sought CBK approval to allow it and its associate companies to temporarily exceed the 25 percent limit for aggregate shareholding in Credit Bank for a period of 36 months as the lender continues to scout for new investors.
ECP chief investment officer Suleiman Kiggundu said in the letter to the CBK the conditions for the Sh1 billion injection will include an additional board seat and the listing of the bank’s share on the Nairobi Securities Exchange within three years.
“We look forward to working closely with the CBK towards finalising the underlying processes to enable the follow-on investment to be funded by a target completion date of 15th December 2025,” said Mr Kiggundu in the letter.
Credit Bank’s cash call reflects a similar move by other lenders such as African Banking Corporation (ABC) Bank, Paramount Bank and Sidian Bank, which have turned to a rights issue to secure fresh capital for immediate and long-term compliance. This is after a change in law compelling banks to build core capital gradually up to Sh10 billion by 2029.
The Sh2 billion to be raised from the two institutional investors will lift Credit Bank’s core capital to at least Sh3.23 billion, making it compliant with the Sh3 billion minimum capital required by the end of December. This will give the lender room to look for additional capital to comply with a higher bar come the end of next year.
At the EGM, Credit Bank is also seeking approval to issue a $1.5 million (Sh194.1 million) convertible note for supplementary capital. This will have a maturity of at least five years priced at six percent annually.
The minimum core capital in the banking sector was, through the Business Laws (Amendment) Act 2024, revised upward from Sh1 billion to Sh3 billion by the end of December, Sh5 billion by the close of 2026, Sh6 billion by the end of 2027, Sh8 billion in 2028 and Sh10 billion by the close of 2029.
