ECB shareholders raise Sh1.2b to boost bank liquidity

Equatorial Commercial Bank logo hanging on a building
Equatorial Commercial Bank logo hanging on a building

Equatorial Commercial Bank shareholders have injected a further Sh1 billion in the bank to boost liquidity following a rights issue.

Mwalimu Sacco, which acquired a 75 percent stake in the bank in 2015, pumped in Sh750 million while Sameer Investment Group invested Sh250 million.

Following the investment, ECB plans to launch new products and enter into new segments of the markets in pursuit of profitable growth.

“This infusion of capital by our shareholders will not only further improve our capital base and give us a sound and solid platform on which to grow our loan book and expand our service portfolio beyond the current offering,” ECB Chief Executive Tim Gitonga said.

The announced a net loss of Sh486 million shillings in 2015 on the back of a shrinking loan book and declining non funded revenue. Net interest income stood at Sh612 million down from Sh919 million in 2014, while the loan book contracted 17 percent to Sh10.3 billion in 2015.

This is the second rights issue by the bank having already raised Sh500m in December. ECB created 200 million new shares, which it sold at Sh5 each to existing shareholders.

Mwalimu National Sacco is using the investment in ECB as a launch pad to converting into a fully fledged bank by diversifying its investments.

“Our desire to transition from FOSA to a full-time commercial Bank will have minimum financial implications and we will be able to reap from economies of scale as a result of leveraging on ECB’ established banking infrastructure,” Mwalimu Sacco Chief Executive Robert Shibutse said.

The reinvestment in the bank comes a time small lenders are shoring up their capital requirements following recent scares that in the banking sector following the closure of Chase Bank.

Family Bank is in the process of raising cash through a rights issue while Fidelity Commercial Bank sold a stake in the bank to the Duet Group for Sh1.9 billion. Jamii Bora Bank last week raised Sh1.2 billion shillings through private equity as it seeks to boost SME lending.

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Story By Michael Karanja
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