Four banks yet to meet Sh1bn minimum capital

Four commercial banks have not yet raised the minimum capital requirement of Sh1 billion even as the time given elapse today.

All Kenyan banks are supposed to increase their core capital base from the current Sh250 million to a minimum of Sh1 billion. The directive was issued in 2008, setting the deadline for the new capital requirements as end of 2012.
There are 43 commercial banks, one mortgage company and 5 foreign based representative offices in Kenya. The regulator said the four non-compliant banks had put in place measures to ensure compliance by the today's deadline.
"The four operating banks whose minimum capital was below Sh1 billion as at 30th November 2012 have submitted their capital build up plans to CBK indicating how they intend to attain the minimum core capital by December 2012," CBK said in an email response, without disclosing which banks.
"As a result, we currently do not anticipate that any of the banks will fail to attain the minimum capital requirement by the deadline,"
According to the banking Act, banks were supposed to increase their capital level from Sh250 million to Sh350 million by end of 2009, Sh500 million by end of 2010, Sh700 million by end of 2011 leading to Sh1 billion by end of this year.
According to CBK annual data, the banking sector registered strong capital levels growth during the year up to June 2012 . The total capital, which comprises core and supplementary capital grew by 22.6 per cent from Sh 240.1 billion in June 2011 to Sh294.3 billion in June this year.
"The improvement in capital base of the commercial banks is attributed to the CBK’s policy to raise the capital base from Sh 250 million in 2008 to Sh 1 billion by December 2012," CBK said in the report.
The need to raise the core capital has seen banks increase funds drive activities. For instance several banks this year held rights in a bid to strengthen their capital positions. These include Standard Chartered and Cfc Stanbic Bank.

 BY WINFRED KAGWE