JAMII Bora Bank is not considering any merger with other financial institutions to meet the Sh5 billion core capital requirement by the Central Bank.
This comes as small banks lay down strategies among them mergers, to survive under the new rule set for 2018. A section of the players are also trying to lobby the government to revise the rule, according to sources.
CBK is expected to enforce the requirement proposed by National Treasury Cabinet secretary Henry Rotich who in his 2015/16 budget statement said banks will be required to raise their core capital from Sh1 billion to among other reasons
ensure the banks are well capitalised to enable them undertake major projects and absorb financial shocks.
Speaking at the bank's annual general meeting in Nairobi yesterday, Jamii Bora CEO Samuel Kimani said the bank will raise its capital to the required amount.
“We have Sh 2.3 billion capital. Our plan is to raise another Sh3 billion. We will will not be merging with any bank,” said Kimani.
He said the bank will raise the capital in two tranches of Sh1.5 billion in the next three years.
“We will raise Sh 1.5 billion by end of 2016 and then 1.5 billion before 2018 when the Sh5 billion core capital rule is coming into effect,” he said.
Kimani said the bank plans a rights issue, convertible debt which it will convert into equity and bringing on board a strategic investor.
“We believe we need a strategic investor to come in. Somebody with banking experience, probably someone with deeper pockets because today we have got some 600 shareholders but none of them are in banking,” said Kimani.
Chairman James Gacheru said the bank plans to grow the balance sheet to Sh20 billion this year by growing its loan book and reducing liabilities.
It also seeks to increase profit before tax to Sh 150 million from Sh 96 million in 2014.The bank's current balance sheet is Sh 14 billion.
“Following shareholder approval last year to raise an additional Sh1 billion capital over the past 12 months , I am happy to report that we are on course to hit that target before the end of 2015,” SAID Gacheru.
The bank's total assets grew by 87 per cent from Sh 7.01 billion in 2014 to Sh 13.1 billion last year.