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Kenyan financial services holding company KCB Group, managed by CEO Paul Russo, is looking for a $200 million loan to help strengthen the capital base of its Kenyan subsidiary, KCB Bank Kenya. The decision follows worries that the subsidiary’s loan-to-deposit ratio has exceeded regulatory limits.
The decision comes after KCB Group signed a large share purchase arrangement with Access Bank, a leading Nigerian bank. The agreement calls for KCB to sell its whole 100% stake in National Bank of Kenya Limited (NBK) for Ksh13.2 billion ($100 million), or 1.25 times net book value.
In light of these strategic moves, KCB Group intends to strengthen its capital adequacy ratios in accordance with the Central Bank of Kenya’s (CBK) guidelines. Despite prior efforts, including a financial infusion of Ksh14 billion ($105.88 million) into NBK, the subsidiary failed to achieve the necessary capital requirements.
Paul Russo, CEO of the KCB Group, reaffirmed the company’s commitment to strengthening its Kenyan subsidiary through a combination of retained income and extra borrowing from development finance institutions.
“KCB Bank Kenya will augment its core capital through the growth of retained earnings,” Russo noted, highlighting the pursuit of $200 million in subordinated debt from development finance institutions to strengthen the bank’s Tier II capital.
Under Russo, who took over as CEO in May 2022, KCB Group has strengthened its position as one of East Africa’s leading groups, serving as the holding company for KCB Bank Kenya, National Bank of Kenya, and regional subsidiaries in Tanzania, South Sudan, Uganda, Rwanda, Burundi, and Ethiopia.
The company remains a dominating influence in Kenya’s financial environment, with the largest banking group by assets and one of the best-capitalized corporations on the Nairobi Securities Exchange.
