The Central Bank of Kenya (CBK) has fined UBA Kenya for breaching capital requirements. The lender failed to meet the 8% minimum core capital-to-deposit ratio following continued losses, the bank said.

UBA Kenya is among 12 commercial banks fined by the CBK for various regulatory breaches, as its core capital-to-deposit ratio fell sharply from 29.46% in 2022 to 7.92% in 2023 despite narrowing its losses. 

The bank reported a pre-tax loss of $2.6 million (KES344 million), down from $3.3 million (KES437 million).

Commercial banks that also breached the rule alongside UBA include Housing Finance, a mortgage finance bank, and Development Bank of Kenya, a state-owned lender. CBK requires lenders to maintain a 10.5% floor for the core capital to risk-weighted assets ratio, 14.5% total capital to risk-weighted assets, and 8% for the core capital to deposits ratio. 

“Twelve commercial banks were in violation of the Banking Act and CBK Prudential Guidelines as at December 31, 2023, compared to thirteen commercial banks as at December 31, 2022,” the CBK said in its banking sector report.

“Most of the violations were with respect to breach of single obligor limit due to depreciation of the Kenya Shillings against the US Dollar and decline in core capital in some banks that have continued to report losses,” the CBK said.

Cash-strapped Spire Bank, which was acquired by Equity Group in 2023, and Consolidated Bank did not meet the core capital requirement of $7.7 million (KES1 billion) and also fell short of the 10.5% of the core capital to total risk-weighted assets rule.

The breaches come even as the CBK plans to increase the minimum capital requirement for commercial banks tenfold to $77.8 million (KES10 billion). The move, which could prove challenging to small banks, will boost resilience to potential financial risks like increased cyber fraud threats and economic shocks, the CBK said in June.