Lagos based lender Access Bank has announced plans to inject an undisclosed amount of capital into its recently assimilated loss making Kenyan subsidiary Transnational Bank.
According to Access Bank’s Chief Executive Herbert Wigwe, the capital injection will take place once the bank acquires a 97 percent stake in Transnational Bank. Access Bank had initially announced plans to acquire 93.57 percent stake in Transnational Bank but the Central Bank of Kenya has given the lender the go ahead to acquire up to 100 percent stake in the Kenyan lender.
In the first nine months of 2019, Transnational Bank posted a net loss of Ksh. 23.3 million and according to Access Bank’s CEO the funding will return the lender to profitability on increased volumes.
“It will be paid for in cash so we have taken out the existing shareholders and we will basically inject a bit more equity into the institution. So those who will be given equity don’t exceed more than about three percent or four percent of the existing shareholders,” Mr Wigwe said in a transcript of a conference call.
Mr. Wigwe did reveal the amount of cash Access was willing to spend on the acquisition but he however mentioned that the bank has done relevant due diligence and is making payments that are on “an adjusted book basis.”
Transnational Bank has been making losses since 2018 when it closed the year with a net loss of Ksh.71.84 million. In the first nine months of 2019, the bank’s core capital stood at Ksh.1.76 billion which is above the CBK’s minimum requirement of Ksh.1 billion.
The announcement by Access Bank comes just two weeks after KCB Group injected Ksh. 5 billion into its subsidiary National Bank of Kenya (NBK) in an effort to fill the capital deficits that have affected the bank in recent years.
The funding according to KCB Group will augment the lender’s balance sheet and allow it to expand its financial operations.