Tuesday, October 09, 2007

Diamond Trust rights issue

1 ½ years ago, Diamond Trust Bank raised 735 million from shareholders, and now they are back this time targeting another 1.6 billion shillings ($24 million). NIC bank also has a rights issue on-going while that of Housing Finance has stalled temporarily.

The rapid growth of assets, loans and deposits has created a gap in capital that banks will need to fill up to maintain capital adequacy and Basel II requirements. Other banks likely to require to raise capital could include Kenya Commercial (after a previous right issue 2004), Cooperative, National Bank of Kenya, Commercial Bank of Africa, Standard Chartered, Stanbic, Investment & Mortgages, Barclays, Equity, and even the new CFC/Stanbic Bank.


MainaT said...

Banks, on the list you've given that you think will need additional capital, is that based on infomation not in th public arena. As far as Basel2 is concerned, some may actually end requiring less capital. It all depends on their loan portfolios and their risk management models.

Ssembonge said...

May be these banks should merge. I've never seen the case where you have as many banks raising capital like this. Is this because of inflation or too much liquidity or both.

Is CBK sleeping on the job?

Anonymous said...

Banks, I agree with your list of the Banks that will soon be needing to raise captial. Mainat - the asset and liability growth rates of some of these indicate they will soon need to raise additional capital. While the Basel2 requirements will distribute the risk weighted capital allocation differently, I would rather think most banks here will take such a big hit from the operational risk rating as to need more rather than less capital overall.
My interest is on the listed ones as this next round of capital raising may not be as rosy as the last round due to the changed market conditions.

bankelele said...

MainaT: Just a glance at their capital viz their assets. And you can probably add Equity to that list with their staggering growth. It's all public info

Ssembonge: Anway we'll see if Basel are adopted. And hwo come they didn't forsee the housing crash in the US which was apparent for two years?

Anonymous: Listed banks should be ok, in fact I'd expect to see more banks go public to raise their profile and easy cash at the same time


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