NIC Bank gets nod to raise Sh2bn in capital rules race

NIC Bank has received regulatory approval to raise Sh2.1 billion through a rights issue as it seeks to boost its capital ratios ahead of new Central Bank requirements.

The approval by the Capital Markets Authority grants the lender an opportunity to exercise its third cash call in seven years.

CMA said in a statement Tuesday that the bank could now issue and list an additional 42,663,040 ordinary shares at a price to be announced later.

“CMA has reviewed the disclosures by NIC Bank Limited and is satisfied that all the requirements have been met,” read the statement.

MEET STATUTORY REQUIREMENTS

Shareholders of the bank agreed to the cash call at its extraordinary general meeting that was held last month.

NIC bank had said it needed to raise capital to meet statutory requirements. Its total capital stood at 12.44 per cent, just 0.44 per cent above the Central Bank of Kenya’s minimum of 12 per cent.

The banking regulator requires banks to increase the ratio to 14.5 per cent by the end of the year. Financial institutions that fail to comply will be constrained to increase lending.

OVERSUBSCRIBED

In total, the lender was to raise Sh5.1 billion through a mix of a cash call and a corporate bond, with the latter targeting to raise Sh3 billion.

Its subsidiaries, NIC Capital and NIC Securities have been the transaction advisers for the two capital raising mechanism by the Nairobi Securities listed bank.

In 2007, NIC raised Sh1.1 billion through a rights issue that was oversubscribed by 49 per cent, with another rights issue in 2012 which raised Sh2.1 billion and was oversubscribed by 238 per cent.