Companies

Nigerian lender to inject fresh capital into Transnational Bank

transnational

A customer at a Transnational Bank branch in Nairobi. FILE PHOTO | NMG

Nigerian lender Access Bank will inject fresh capital into its newly acquired loss-making Kenyan subsidiary Transnational Bank.

The multinational said its local business would return to profitability on increased volumes including of transactions like payments.

Chief executive Herbert Wigwe said the lender would buy 97 percent of Transnational and then put additional money into the small lender that posted Sh23.3 million net loss in nine months to September 2019.

“It will be paid for in cash so we have taken out the existing shareholders and we will basically inject a bit more equity into the institution,” Mr Wigwe said in a transcript of a conference call.

“So those who will be given equity don’t exceed more than about three percent or four percent of the existing shareholders.”

The stake to be acquired is higher than the 93.57 percent that the bank had announced earlier. The Central Bank of Kenya (CBK) has given the Nigerian lender the green light to acquire up to 100 percent stake in Transnational.

It is not clear how much Access will pay for the acquisition but Mr Wigwe said Access did the relevant due diligence and is making payments that are on “an adjusted book basis.”

Transnational has been in losses since 2018 when it closed with a net loss of Sh71.84 million. Its core capital stood at Sh1.76 billion as of September 2019, above CBK’s minimum requirement of Sh1 billion.

Mr Wigwe is upbeat of returning the Kenyan lender into profitability within a year.

Access, with an asset base of about Sh1.61 trillion ($16.10 billion), says Transnational started making losses when it lost correspondent banking lines.