The Central Bank of Kenya (CBK) has indicated that UBA Kenya failed to meet the 8% minimum core capital-to-deposit ratio, breaching capital requirements due to continued losses. Despite narrowing its losses, UBA Kenya’s core capital-to-deposit ratio dropped significantly from 29.46% in 2022 to 7.92% in 2023. The bank reported a pre-tax loss of $2.6 million (KES344 million), an improvement from the previous year.
CBK identified 12 commercial banks, including UBA Kenya, for various regulatory breaches related to capital ratios. Notably, the CBK requires banks to maintain specific ratios such as 10.5% for core capital to risk-weighted assets, 14.5% for total capital to risk-weighted assets, and 8% for the core capital to deposits ratio.
The breaches in regulations extended to other banks like Housing Finance and Development Bank of Kenya. The CBK highlighted that most violations were due to single obligor limit breaches caused by currency depreciation and declining core capital in banks with sustained losses.
Furthermore, Spire Bank and Consolidated Bank also fell short of the core capital requirements. The CBK plans to increase the minimum capital requirement for commercial banks substantially to enhance resilience against financial risks like cyber fraud and economic shocks.
It is important to note that a previous version of the story incorrectly mentioned that UBA Kenya was fined by the CBK, which UBA has denied.