National Bank of Kenya (NBK) has accused the Treasury of dragging its feet in giving the bank approval to raise Sh10 billion through a rights issue, which it requires to boost capital.
The bank is unable to increase its loan book beyond the Sh71 billion it lent as at June 30, 2015 because this would go against Central Bank rules.
According to the requirement, of every Sh10 a bank lends out, Sh1 must be from shareholders’ capital. Speaking before the parliamentary Public Investment Committee (PIC) NBK managing director Munir Ahmed said the lender is unable to raise funds because both the Treasury and Capital Markets Authority (CMA) have not given it a go-ahead.
“The bank wants to lend more, but may soon run out of shareholder capital required by the regulator for higher volumes,” he said. Ahmed said since he took over the leadership of the bank in 2013, the bank has been growing its loan book faster than the shareholders’ capital.
The portfolio has been growing at a rate of 31 per cent year-on-year since 2013 while customer deposits are soaring, approaching Sh100 billion. The government is the bank’s third largest shareholder with a 22 per cent stake.
National Social Security Fund is the largest with a 48 per cent stake while the public owns 29 per cent through Nairobi Securities Exchange.
Treasury is yet to write to CMA to allow the bank’s rights issue to proceed and the administrative procedure has resulted in nearly two years of delay, the MD charged.
Ahmed, who appeared before the committee to give an update on the bank’s revival, said NBK did not require Treasury to put in money as reported in some sections of the media.