National Bank of Kenya (NBK) expects to close a Sh4.4 billion shareholder loan by end of September
to shore up its capital, which has remained below regulatory
requirements for 15 months.
The mid-sized lender has
been seeking the debt funding from its top two shareholders: National
Social Security Fund (NSSF) and the Treasury, since June last year
following the collapse of a planned Sh13 billion rights issue.
“We
are engaging our shareholders. We have done presentations to them and
hope to close this financing by end of third quarter,” said NBK chairman
Mohamed Abdirahman Hassan after the lender’s annual general meeting
held on Friday.
“We decided to look for debt as we wait
for equity. On rights issue, we are waiting for the Treasury to sort
out the matter,” said Mr Hassan.
The NSSF will provide Sh3 billion and the Treasury is expected to chip in Sh1.4 billion; prorated as per their shareholding.
The
State-run pension scheme is the largest shareholder at NBK with a 48.05
per cent stake while the Treasury directly owns 22.5 per cent of the
bank.
Shareholders Friday approved a bonus issue of one
new share for every 10 shares held, a move which will see NBK inject
Sh153.99 million in its operations from the reserves.
Below statutory minimum
The
NBK’s total capital to total risk-weighted assets ratio stood at 11.9
per cent as at December 2016, which is 2.6 percentage points below the
Central Bank of Kenya statutory minimum of 14.5 per cent.
The
Nairobi Securities Exchange listed lender first breached the ratio —
crucial for the bank to grow its loan book — in March last year when it
fell short by 1.4 per cent after remaining compliant by a razor-thin
margin for several quarters.
“This under-capitalisation
continues to impair business growth and exert pressure on the
operations of the company,” NBK chief executive Wilfred Mutuku Musau
said in the bank’s latest annual report.
The bank
turned to a shareholder loan following a three-year impasse on a Sh13
billion rights approved by shareholders in mid-2013, but has failed to
take off due to differences between NSSF and the Treasury.
The
bank bounced to profit zone with net earnings of Sh162.1 million for
the year ended December 2016, compared to a net loss of Sh1.15 billion
in 2015.
Its shareholders have weathered a three-year
dividend drought, having last received a dividend of Sh0.33 per share
for the period to December 2013.
The NBK counter has
rallied 11 per cent since January due to the bonus offer, and closed on
Friday at Sh7.90 per share at the Nairobi bourse.
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