Bank of Africa (BOA) Kenya has sold part of its head office for Sh479.9 million in the last two years in a bid to comply with regulatory requirements limiting investment in land and buildings.
The bank discloses in its latest annual report that it disposed part of its office space to Saham Insurance for Sh100.2 million in the year ended December 2019, continuing a trend it started the year before.
“During the year, the bank disposed half a floor of its head office to Saham Insurance in an effort to comply with the regulatory limit on investments in land and buildings ratio,” Bank of Africa said in the report.
The Central Bank of Kenya (CBK) requires that a bank’s investment in land and buildings as a share of core capital should not exceed 20 percent.
Bank of Africa Kenya has, however, been in breach of this ratio, closing December 2019 at 65.8 percent in contrast with 32.8 percent the previous year.
The lender had in 2018 also disposed of three floors in the head office to its parent firm Bank of Africa Group for Sh379.77 million to bring down the ratio within CBK limits.
The lender closed 2019 in breach of all CBK ratios, forcing its parent company to inject Sh1.6 billion ($15 million) as tier One capital on March 10.
The new capital is expected to bring it in compliance with all the CBK ratios except that governing property investment limits, according to its projections.
Investment in land and buildings as a ratio of core capital is expected to come down to 31.4 percent.
The bank posted a net profit of Sh173.1 million in 2018 before swinging into a net loss of Sh2.04 billion last year. Net loss for the three months of this year stood at Sh289.9 million.