• Tue. Dec 1st, 2020

BOA Kenya Exempted From CBK.

ByRinevershirlley

Nov 10, 2020
Bank Of Africa.

The Central Bank of Kenya has exempted BOA Kenya Limited from ownership rules for up to five years.

EXEMPTIONS

The BOA Kenya Limited has been exempted from the Central Bank of Kenya ownership rules for up to five years. Moreover, the lender’s parent firm BOA Group is allowed to hold more than a 25 percent capital share. This should be in the bank against the CBK threshold.

BOA Kenya’s mother firm injected a new Ksh.1.5 billion capital line in March. This aimed at steadying the bank’s ship which has recently completed a balance sheet reorganization.

Regulations

“Bank of Africa Kenya has received approval from the Cabinet Treasury of the National Treasury and Planning. This is because they are to recognize Ksh.1.5 billion as tier one capital. This also brings shareholding of the bank’s parent company above the statutory threshold. BOA Kenya said in a statement on Friday that should be 25 percent for a non-regulatory entity.

The capital injection puts it in a strong position for supporting customers during the COVID-19 period. Hence confirms the confidence of the bank shareholders in the Kenyan market.

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However, Non-regulated entities can’t either hold directly or indirectly more than 25 percent of share capital. This is according to Section 13 (1) of the Banking Act enforced by the CBK. Also, it is in a local banking institution.

In 2019, BOA Kenya implemented a balance sheet clean-up. It saw it made provisions for its non-performing loan (NPL) portfolio eroding its capital adequacy ratios.

In addition, the bank has been targeting a leaner balance sheet with improved asset quality with efficient liquidity management.

The banks’ core capital weakened to Ksh.1.3 billion from Ksh.3.5 billion with the bank shedding Ksh.2.7 billion in shareholder funds. This is according to the Lender’s financials to June 30.

Bank Of Africa.
Bank Of Africa.

The bank breached other thresholds including core capital to total deposit liabilities. Total risk-weighted assets whose ratios stood at 3.7 and 8.4 percent. This is against thresholds of 10.5 and 14.5 percent and the weaker core capital came near the Ksh.1 million threshold.

The bank booked a Ksh.179.5 million loss in the period from a Ksh.114.4 million profit midway 2019.

BOA Kenya has 29 branches and two business centers in its operations. It also specializes in corporate, SME, and retail clientele.

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