Kenya Lake Region Counties Bloc Mulls Buying Consolidated Bank
(Bloomberg) -- Kenya’s Lake Region Economic bloc that comprises more than a dozen counties is considering acquiring state-run Consolidated Bank of Kenya Ltd.
“The intention has been put on the table,” Abala Wanga, chief executive officer of the bloc with 14 among Kenya’s 47 counties, said Wednesday by phone. Once the National Treasury approves negotiations, the transaction shouldn’t take “too long” to conclude because it will be done as a government-to-government deal, Wanga said.
Treasury Secretary Henry Rotich said his office is yet to receive a formal proposal on the matter. Consolidated wasn’t immediately available for comment.
The lender, 78 percent owned by the National Treasury, has been struggling to meet capital statutory requirements, and is one of three state-controlled banks that the government planned to merge. The others are Nairobi Securities Exchange-listed National Bank of Kenya Ltd. and the Development Bank of Kenya Ltd.
State corporations including the National Social Security Fund own 22 percent of the bank.
Consolidated has been in breach of at least three regulatory metrics for years due to inadequate capital. Its total capital to total risk weighted assets ratio was 3.4 percent by end of September 2018, against a regulatory minimum of 14.5 percent.
The lender expects to receive as much as 3.5 billion shillings ($34.9 million) from a strategic investor by the end of the first quarter to boost its capital, Business Daily newspaper reported in January. In December, investors approved 175 million new preference shares to be offered to the yet-to-be identified investor, the Nairobi-based publication reported.
©2019 Bloomberg L.P.