Treasury Consolidated Bank stake hits 93pc

Consolidated Bank head office on Koinange Street in Nairobi. FILE PHOTO | NMG 

By PATRICK ALUSHULA
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Summary

• The Treasury has raised its stake in Consolidated Bank to 93.4 percent after converting a Sh1.6 billion debt into shares.
• Coming from an initial 85.8 percent stake, the deal diluted other shareholders such as National Social Security Fund, Kenya Pipeline Company, Kenya National Assurance and Telkom Kenya.
• The debt-to-share swap deal also helped the bank to meet regulatory capital levels, which in the past five years have been below the minimum set levels.

The Treasury has raised its stake in Consolidated Bank to 93.4 percent after converting a Sh1.6 billion debt into shares.

Coming from an initial 85.8 percent stake, the deal diluted other shareholders such as National Social Security Fund, Kenya Pipeline Company, Kenya National Assurance and Telkom Kenya.

The debt-to-share swap deal also helped the bank to meet regulatory capital levels, which in the past five years have been below the minimum set levels.

“There was a capital injection of Sh1.6 billion by the Treasury by way of converting debt into shares,” said CEO Thomas Kiyai.

“We can now lend more and we are also meeting all the capital ratios except one. We are considering balance sheet reengineering and also continue search for a strategic investor.” 

The Treasury in February got 80 million shares for the Sh1.6 billion it had loaned Consolidated Bank to pay bondholders.

The deal has helped increase the bank’s core capital nearly 20 times from Sh58.3 million to Sh1.152 billion.

This is the first time since 2015 that the lender is compliant with minimum statutory capital of Sh1 billion set by the Central Bank of Kenya (CBK).

The bank had cut its loan book by 12.6 percent or Sh1.06 billion last year in the wake of weakened capital strength and rising non-performing loans.

Consolidated cut net loss by 1.62 percent to Sh531 million last year helped by reduced costs.

Net interest income dropped by 16 percent to Sh541 million while non-interest income fell by nine percent to Sh1.23 billion.

The bank had borrowed Sh1.12 billion from CBK to address liquidity shortage but had cut this to Sh720 million by last December.

Consolidated is still scouting for a strategic investor to take up 175 million convertible preference shares worth Sh3.5 billion. The investor will eventually take up a majority stake in the bank upon conversion of the shares through the privatisation process.