National Bank of Kenya is racing to close a Sh4.4 billion shareholder loan to help shore up its capital after the lender’s key capital ratio slipped further below regulatory requirements.
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’s statutory minimum of 14.5 per cent.
The 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 percentage points after remaining compliant by a razor-thin margin for several quarters.
Chief executive Wilfred Mutuku Musau said the bank is at an “advanced stage” to secure the cash from its top two owners, National Social Security Fund and the Treasury.
The bank made the request for a shareholder loan in June last year where NSSF was to provide Sh3 billion and National Treasury (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 owns 22.5 per cent of the bank.
“It is ongoing. There are some good assurances from the shareholders,” Mr Musau told the Business Daily.
“We are at the tail end of receiving the money from NSSF,” he revealed.
The breach in capital ratios came even as NBK bounced back to profit with net earnings of Sh162.1 million for the year ended December 2016, compared to a net loss of Sh1.15 billion in 2015.
The performance was aided by lower deposit costs and lower provisions for bad loans.
NBK turned to a shareholder loan following a three-year impasse on a Sh13bn rights approved in mid-2013, but has failed to take off due to differences between the two top shareholders.