Consolidated Bank to raise Sh5.5 billion capital
STATE owned Consolidated Bank plans to raise more than Sh5.5 billion from the local market to boost its capital base. Apart from the just announced Sh4 billion corporate bond to be issued soon, the bank has approached the Treasury, the main shareholder through the Deposit Protection Fund, for Sh1 billion additional capital. The bank is also targeting to raise Sh500 million from local financiers to support an aggressive expansion programme that also includes agency banking.
The above amounts are above the Sh800 million advanced to the institution by the European Investment Bank recently. "You never borrow too much," said the bank's chairperson Eunice Kagane during a press briefing to announce the Sh4 billion bond. "The growth of the bank is not based on deposits alone." The institution's corporate bond was approved by the Capital Markets Authority last week and will see the bank issue the bond in two tranches of Sh2 billion each.
The bank's managing director David Wachira said the capital injection will enable the lender to give long term loans to small and medium enterprises as well as to corporate clients. "We have been informed that our request has been received," said Wachira in regards to the Treasury request. The bank's loans and advances grew by 52 per cent to Sh9.2 billion last year but profit after tax decreased by 4 per cent to Sh149.8 million.
Apart from Treasury, other key shareholders include the National Social Security Fund, the Kenya National Assurance, the Kenya Pipeline and the Kenya National Examination Council among other government institutions. Wachira said the bank is now awaiting the direction from the yet to be installed Privatisation Commission as far as its privatisation is concerned. "It is important to privatise the bank at this time when the economy is doing very well," said Wachira.