NSSF backs National Bank with Sh2.9bn in fresh capital

The National Bank of Kenya (NBK) received a major capital boost with its main shareholder the national social security fund pumping in Sh2.9 billion.

The capital injection is part of ongoing efforts to recapitalize the bank which is getting dangerously close to thresholds set by the Central Bank of Kenya.

National Bank has for the past three years been in a race against time to get additional capital to finance its operations.

Plans to raise Sh13 billion through a rights issue quickly faded leaving the bank in a precarious position.

This saw the bank go back to its two main shareholders, the National Social Security Fund (NSSF) and the national treasury seeking a shareholder loan of up to Sh4.4 billion.

The NSSF has become the first to respond to the bank’s SOS committing Sh2.9 billion in fresh capital.

The funds are expected to provide cash to propel the bank to its targeted strategic growth projections.

In the shareholder loan deal, the national treasury will chip in a further Sh1.5 billion.

National Bank Group chief executive officer Wilfred Musau said the capital injection shows the level of confidence NSSF and other shareholders have in the future of the bank.

“We are grateful to our shareholders and Board of Directors for availing the capital to assist propel the bank’s growth…… Our key target for this year is growth of new business and increased return to stakeholders,” Mr Musau said.

The timing of the capital boost comes hot on the heels of revelations of a buyout plan by the KCB group.

KCB has already presented a share swap deal to the national treasury seeking to acquire 70 percent of the bank in efforts of turning it around.

Kenya’s banking sector has been gearing up for a round of consolidation as the, banking regulator continues to push for larger, well capitalized banks.