National Bank turns to international financiers for capital after delayed rights issue

Listed lender National Bank has ditched plans to raise Sh13 billion through a rights issue following years of delays.

The bank says failure by its anchor shareholders to commit to the cash call have forced it back to the drawing board on where to source much needed capital.

National Bank Chairman Abdulrahman Hassan revealed to shareholders that the bank continues to struggle due to capital inadequacy which needs to be addressed.

“National Bank, in spite of the serious capital shortfalls, has established a profitability and growth trend since 2013. Loan facilities that resulted to our 2015 loss on account of heavy provisions against loan loss are fully secured and the management is reporting positive gains in the recovery process,” Mr Hassan said.

NBK announced plans to raise cash through a rights issue in 2013, by issuing 630 million shares valued at Sh21.50. however the impasse between the NSSF and treasury over the years may force a rethink over the rights issue, with NBK’s share having lost value.

The National Social Security Fund is the anchor shareholder of the bank with a 48 percent stake while the National Treasury owns 22.5 percent of the bank.

Mr Hassan revealed the bank would instead turn to other sources of capital, including sourcing debts from international funds and partners.

The Sh13 billion is expected to support the bank’s growth strategy and more importantly boost its capital ratios, especially the total capital to total risk-weighted assets that is marginally above the minimum requirement by 0.9 percentage points at 15.4 per cent.

Delay in raising the funds has seen the bank sell some of its assets in an effort to shore up its capital base.

National Bank announced a shock loss of Sh1.2 billion in 2015 on the back of growth in bad loans. The bank recovered slightly in the first quarter announcing a Sh335 million profit which it hopes to help the bank bounce back.