KCB set to pump KSh3 Billion Additional Capital into National Bank

KCB Group has announced that it is set to pump up to Sh3 billions of additional capital into the National Bank of Kenya (NBK) by the end of June.

“We will soon give the balance of Sh2.5 billion to Sh3 billion,” said KCB chief executive Joshua Oigara.

This comes after KCB injected Sh5 billion capital to NBK after the acquired bank remained in breach of capital adequacy ratios.

“When we acquired NBK, we estimated we will provide the subsidiary with capital of Sh7.5 billion to Sh8 billion,” said Mr. Oigara.

In the financial year ending December 2019, NBK fell short of the compulsory capital to support its lending and deposit-taking activities with its core capital to total deposit ratio standing at 7.3 percent, 0.7 percentage points below the minimum requirement of eight percent.

NBK core capital to total risk-weighted assets stood at 10 percent, 0.5 percentage points lower than the legal minimum of 10.5 percent, while total capital to total risk-weighted assets stood at 11.7 percent against the set threshold of 14.5 percent, a slit of 2.8 percentage points.

According to Mr. Oigara, the actual amount that KCB will inject into NBK will depend on a number of factors which include the lender’s ability to recover bad loans noting that NBK will be affected by defaults from the negative financial impact of the coronavirus.