Cooperative Bank managing director Gideon Muriuki. The Cooperative Bank
has taken a Sh4.6 billion loan to boost its capital ratio in line with
new guidelines by the Central Bank of Kenya. FILE PHOTO | FILE
The Cooperative Bank has taken a Sh4.6
billion loan to boost its capital ratio in line with new guidelines by
the Central Bank of Kenya.
The seven-year credit line
from the German Development Bank brings to more than Sh16 billion the
loans taken from international lenders since last year.
The loan’s effective date is September 15.
The loan’s effective date is September 15.
COST DIFFERENTIAL
Lenders
have in the recent past been opting for various methods of
capitalisation ahead of the new CBK rules expected to take effect from
January next year.
The Cooperative Bank said it opted for long-term loans as opposed to issuing a bond or rights issue due to cost differentials.
The Cooperative Bank said it opted for long-term loans as opposed to issuing a bond or rights issue due to cost differentials.
“These
long-term funds come at very concessional rates compared with bonds. It
is better to borrow offshore as the interest rate is a single digit,”
said managing director Gideon Muriuki in an interview.
The
listed lender also plans to leverage on retained earnings to capitalise
its coffers and give it enough cover against any market risks
associated with lending.
“The facility is for onward
lending to small and medium-size enterprises. The loan will be repaid in
10 instalments, ending on November 2020,” Mr Muriuki said.
Early last year, the bank took a seven-year loan of Sh8.1 billion (euros 70 million) from the European Investment Bank.
In
mid-2013, it took another long term credit facility of Sh5.3 billion
($60 million) from the World Bank’s private lending arm, the
International Finance Corporation
Early last year, the bank took a seven-year loan of Sh8.1 billion (euros 70 million) from the European Investment Bank.
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