BOA Kenya granted exemption to CBK ownership rules

BOA Kenya granted exemption to CBK ownership rules

The Bank of Africa (BOA) Kenya Limited has been exempted from the Central Bank of Kenya (CBK) ownership rules for up to five years.

The exemption by the National Treasury granted in a special gazette notice dated September 11 is set to allow the lender’s parent firm BOA Group to hold more than a 25 per cent capital share in the bank against the CBK threshold.

In March, BOA Kenya mother firm injected a new Ksh.1.5 billion capital line to steady the bank’s ship which has recently completed a balance sheet reorganisation.

“Bank of Africa Kenya has received approval from the Cabinet Treasury of the National Treasury and Planning to recognize Ksh.1.5 billion as tier one capital, thereby bringing the shareholding of the bank’s parent company above the statutory threshold of 25 per cent for a non-regulatory entity,” BOA Kenya said in a statement on Friday.

“These funds have been held by the bank as a customer deposit since March toto as the Group sought exemption. The capital injection not only confirms the confidence of the bank shareholders in the Kenyan market but also puts it in a strong position to support customers during the COVID-19 period.”

Section 13 (1) of the Banking Act enforced by the CBK prohibits non-regulated entities from holding directly or indirectly more than 25 per cent of share capital in a local banking institution.

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

The bank has been targeting a leaner balance sheet with an improved asset quality with efficient liquidity management.

According to the lender’s financials to June 30, 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.

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

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

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