Consolidated Bank is now looking for an investor to inject additional capital after a series of losses depleted its capital.
The lender disclosed that it has been consulting with the National Treasury to seek ways of recapitalising to give it strong muscles to underwrite bigger businesses.
“On the basis of these consultations, it has been agreed that the bank seeks a strategic investor to inject additional capital in the business. There is a strong investor interest in the bank and we look forward to implement this initiative in the first half of 2017 upon securing all requisite approvals,” said the bank.
The development comes in the wake of another frustrating nine months of trading in which the bank soaked in a net loss of Sh203.5 million, according results signed by the bank’s Chief Executive Thomas Kiyai.
In a similar period last year, it had escaped with a marginal profit of Sh16 million. This has pushed its accumulated losses to Sh739.3 million to condemn shareholders’ funds to another low of Sh1.4 billion as dividend dry spell continues.
For the first time, the bank has failed to meet Central Bank’s threshold of liquidity. Its liquidity ratio dropped to 19.7 per cent against the minimum statutory ratio of 20 per cent. The ratio is used to gauge a bank’s soundness in meeting short-term cash requirements.
This brings to three the number of key ratios that the bank has failed to satisfy in its September results. In the third quarter ended September 30, 2016, its core capital shrunk by 20 per cent to Sh880.2 million against the minimum requirement of Sh1 billion.
Its core capital to total risk weighted assets ratio, which measures a bank’s ability to absorb reasonable amount of risk on behalf of depositors as well as gauge its ability to avoid insolvency, has dropped to 6.2 per cent. This is against the required minimum of 10.5 per cent.
