Spire, Consolidated banks sink deeper into the red

Mwalimu National Sacco linked Spire and State owned Consolidated banks have sunk deeper into the red falling further below prescribed operational thresholds.

In the quarter ending in March, both lenders remained in loss making territory while marking a deterioration in principal operating metrics relating to capital and liquidity.

On its part, Consolidated Bank trimmed its quarterly loss to Ksh.58 million from a greater loss of Ksh.70.4 million but saw its core capital shrink further from the prescribed minimum of Ksh.1 billion to Ksh.758.9 million.

At the same time, the bank’s liquidity ratio fell to 13 per cent from 17.2 per cent at the close of last year.

Consolidate Bank now has a wider Ksh.241.1 million funding deficit from a narrower gap of Ksh.172.4 million at the same time last year.

In its case, Spire Bank quarterly earnings have returned a wider Ksh.268 million loss from a loss of Ksh.255 million in March 2020 will increased impairments driving the bank deeper into loss making territory.

Spire Bank’s core capital has in the period shrunk further to a negative Ksh.2.9 billion while its liquidity ratio stands at just 4.3 per cent against the recommended ratio of 20 per cent.

The bank remains in dire need of fresh capitalization to steady its operations and has been in pursuit of potential debt and equity deals in its quest to stay above water.

Consolidated Bank meanwhile continues to rely on bankrolling by the National Treasury to stay on clear waters with the exchequer now holding a 93 per cent stake in the bank after debt-equity conversions.

In a news conference held on Thursday last week, Central Bank of Kenya (CBK) Governor Patrick Njoroge says the reserve bank remains at the disposal of troubled lenders even as he called on the improvement of business models to anchor the stability of distressed banks.

“Any bank facing liquidity challenges has at its disposal all sort of tools including inter-bank and emergency lending from the CBK. The CBK is after all the lender of last resort,” he said.

“Strengthening business models should be at the heart of every solution to ensure problems do not reoccur.”