This archive report was first published on 8 October 2021.
On October 7th, 2021, a Nairobi-based media outlet reported that Absa Bank Kenya Plc had breached regulatory requirements by lending more than 25% of its core capital to a single borrower.
According to the report, Absa Bank Kenya Plc had lent Ksh 18.8 billion, equivalent to 40.6% of its core capital, to East African Breweries Plc, against its core capital of Sh46.3 billion, thereby breaching the 25% limit to a single borrower as required by the Central Bank.
Absa Bank Kenya has since clarified that there was no regulatory breach associated with the transactions with East African Breweries Plc, a regional listed holding company engaged in branded alcohol beverage business.
Clarification on Lending to EAB Plc ¶
Absa Bank Kenya Plc noted that it had approved total facilities amounting to Ksh 10.87 billion to the brewer, which was within its current Single Borrower Limit of Ksh 11.214 billion.
Additionally, the lender noted that an additional Ksh 9.0 billion was advanced to the brewer by virtue of being an agent of Absa Group, its subsidiaries, and affiliates across the continent.
South African-based financial services group Absa Group Limited is the majority shareholder of Absa Bank Kenya with a 68.5% stake.
“Absa Bank Kenya PLC is acutely aware of its duty to keep customer information confidential and ordinarily would not divulge such information with third parties. However, in discussions with EABL and due to the unique circumstances and the inaccurate nature of this article, we have received their express consent to disclose information relating to certain transactions with us…” The bank noted in a statement.
