Money Markets
By JOHN GACHIRI
In Summary
- Jamii Bora Bank said it had been offered Sh975.6 million against the Sh417 million its rights issue was seeking to raise to meet Central Bank of Kenya (CBK) capital adequacy ratios and fund its expansion.
- The bank had raised Sh400 million in October through the conversion of a bond which brings the total capital raised this year to Sh817 million.
Jamii Bora Bank (JBB) has raised Sh417 million in a
cash call oversubscribed by 137 per cent to underscore a huge appetite
for banking stocks.
The bank said it had been offered Sh975.6 million against
the Sh417 million its rights issue was seeking to raise to meet Central
Bank of Kenya (CBK) capital adequacy ratios and fund its expansion.
CBK requires commercial banks to have a minimum
core capital of Sh1 billion beginning next year in a move meant to
strengthen the lenders and avert risk.
Despite the bank getting more offers than it had
bargained for, it can only accept the Sh417 million since the issue did
not have a green shoe option. It will refund Sh558 million.
Green shoe option
“We did not have a green shoe option. This is because we did not want more capital from the existing shareholders.
‘‘We will sell a stake to a strategic investor to
raise Sh200 million in quarter one of 2015,” JBB chief executive Samuel
Kimani told the Business Daily.
JBB had raised Sh400 million in October through the
conversion of a bond which brings the total capital raised this year
to Sh817 million.
The cash call and the bond conversion have
increased the bank’s core capital to Sh2.35 billion and total capital to
Sh3.1 billion. Mr Kimani said the Sh200 million it plans to raise next
year in addition to the Sh817 million it has raised now will increase
its lending capacity by three times.
“That will take our total capital to Sh3.3 billion
and a core capital of Sh2.55 billion. With that capital we can grow our
balance sheet to Sh30 billion from the current Sh10 billion,” said Mr
Kimani.
Analysts expect the bank’s expansion to be driven
by agencies and other channels which are able to pool funds more
efficiently and at a lower cost.
“Jamii Bora has drawn attention to slowing down
establishment of brick and mortar branches pursuing alternative delivery
channels that include mobile and Internet banking (to leverage on a new
core banking system) and agency banking,” said a note on the bank’s
bond conversion issued by Genghis Capital.
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