SBM set to pump in money into Chase Bank deal

The State Bank of Mauritius will pump in more money to Chase Bank’s assets later this year.

Andrew Bainbridge, Group CEO of SBM Holdings Ltd said the lender had pumped in capital last month and would pump in more next month in order to hit minimum required levels.

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The Central Bank has set a liquidity ratio at 20 percent, but the acquisition of a troubled lender’s books brings in the risk of dipping the buyer into a negative cash position.

When SBM acquired Fidelity Commercial Bank last year it had to inject Sh1.45 billion of fresh capital into Fidelity once the deal got all the required regulatory approvals.

The Chase Bank transaction will move SBM Kenya from a tier 3 bank to a strong tier 2 bank within a year of its creation.

Some Kenyan lenders are struggling to keep their capital ratios in check especially after the crisis in the banking sector hit smaller lenders.

Jamii Bora has a negative liquidity ratio at minus 11 percent, which means it is 31 percent lower than the Central Bank of Kenya’s (CBK).