Government lacked will to rescue National Bank, Parliamentary Committee says

Parliamentary Committee on Finance and National Planning has faulted the National Treasury’s reluctance to rescue National Bank even after being aware of the capitalisation hiccups the Bank faced.

The Committee Chairman Joseph Limo said documents presented before the committee suggested the Bank would not where it is had had the treasury acted faster.

“The problem of National Bank has always been capitalization which was largely dependent on the Bank’s two main shareholders – the National Treasury and National Social Security Fund (NSSF). We have been informed that at some point the bank required Ksh 4.2 billion in additional capital which was to be contributed by the two shareholders. NSSF board approved Ksh2.9 billion to recapitalize the bank but the Treasury did not meet its side of the bargain,” Mr. Limo said.

He committee also questioned the mystery surrounding the 2013 rights issue attempt when the bank attempted to raise Ksh 13 billion in new capital.

“We hosted Capital Market Authority a few weeks ago who refuted the claim that it declined to give approval to the Rights issue process. The government had the opportunity to either refinance the Bank as had been agreed with NSSF or support the rights issue, which it did neither,” he said.

The committee was seeking clarifications on some of the key issues concerning the proposed takeover of National by KCB Group.

By Correspondent