Credit Bank Kenya Plc, a tier three lender, is scheduled to hold an Extraordinary Shareholders Meeting(ESM) this 19th December 2025 to get a nod from shareholders for its capital raising plan, ahead of the December 31st 2025 deadline set by the Central Bank of Kenta(CBK).
With its Core Capital at KSh 1.23 Billion against the KSh 3 Billion minimum requirement set by CBK, the clock is ticking for a bank closely associated with the late powerful bureaucrat-turned politician Simeon Nyachae.
Credit Bank Directors have lined up an aggressive recapitalization plan that involves raising KSh 4.5 billion through private placement, issuance of KSh 3 billion worth of preference shares, floating a US$ 1.5million convertible Note as well as an Asset-for-Shares swap involving KSh 1.2 billion worth of land for 12 million shares of the bank.
In the Assets-for Shares Swap, Directors of Credit Bank will be seeking for approval to acquire land worth KSh 1.2 billion from Shangrillas Villas Co. in exchange for Credit Bank ordinary shares of KSh 100 each, amounting to some 12 million ordinary shares.
The US$ 1.5million Note, which the lender intends to raise supplementary capital, will have a maturity period of not less than 5 years.
This Note will bear an Interest Rate of 6% per annum. Holders of the Note will be entitled to convert all or part of the outstanding principal and accrued but unpaid interest into ordinary shares of the bank, having a par value of KSh 100 per share.
The pricing, timing and allotment of shares in the private placement, is yet to be determined and approved by Credit Bank owners.
Credit Bank of Kenya is among a group of lenders, whose minimum capital is below the new requirements. The options available is to decide whether to raise fresh capital, merge with rivals, or prepare for acquisition.
Those banks that who fail to meet the new minimum capital requirements face stiff CBK penalties, including having their licenses downgraded.
CREDIT BANK TOP SHAREHOLDERS
Some of the top individua; shareholders of Credit Bank include the late Simon Nyachae’s family represented by Leon Nyachae and Mrs. Grace Nyachae, Ketan Morjaria and Jay Karia, a British National.
In May 2025, CBK conducted a stress test that found that banks have their core capital to total risk weighted assets ratio (core CAR) below the 10.5% regulatory threshold. These banks required KSh 5.4 billion in additional capital to meet the regulatory capital requirement.
One bank, however, is under acquisition thus reducing the number of banks to 5, with revised total additional capital required at KSh 3.9 billion.
An Event-based Stress Test was also conducted requiring Banks to meet a New Core Capital of KSh3 billion by December 2025.
This stress test was undertaken to assess the ability of banks to raise core capital to KSh. 3 billion through retained earnings by December 2025.
The stress test assumed that Banks may not raise additional capital through rights issue or a strategic investor. Also, existing shareholders are not able to inject additional capital and that only realised Internal Capital Adequacy Assessment Plans are considered.
CBK results showed that 12 banks in tier III, including Credit Bank may need to explore other sources beyond profitability/retained earnings channels in order to raise core capital to KSh. 3 billion by December 2025 under severe scenario based on actual core capital and profitability for June 2025.
If the scenario materializes, these banks will require a total KSh 19.8 billion in six months to December 2025, in additional capital to fully attain the new capital requirement.
CBK also found that falling rates on both Government Securities and on loans to customers, amid a slower pace of new lending and new capital requirement, may strain incomes of some banks, especially those in Tier III, thereby reducing their capacity to raise KSh. 3 billion in core capital by December 2025. This exposes them to vulnerabilities.
CBK requires all banks to raise their mimumum core capital to KSh 10 billion by 2029.
Kenya’s banking space has in recent months seen several mergers and acquisitions, as well as the entry of both domestic and international players. This follows the lifting of moratorium on licensing of new Commercial Banks in Kenya, effective July 1, 2025. The moratorium had been in place since November 17, 2015.
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