Stanbic Bank of Kenya has been left exposed after having granted huge credit facilities to ARM Cement Ltd which was placed under administration few days ago.
The lender had offered the troubled cement maker Sh 1.02 billion overdraft and loans up to Ksh 78.5 million. For its Tanzanian subsidiary Maweni Limestone Ltd, Stanbic Bank gave an overdraft of Ksh 1.57 billion and a loan of 1.74 million respectively.
In 2016, Stanbic Bank of Kenya and Africa Finance Corporation were the biggest gainers after Ksh 14.1 billion capital was injected into ARM to where part of the funds would be used offset its increasingly bad loans. The loan from Stanbic reduced from Ksh 2.1 billion to Ksh 1.1 billion while clearing some of its loans to other lenders.
The lender’s NPLs recorded a 48 per cent rise to Ksh10.35 billion from Ksh7 billion in 2016 resulting to impairment charges of Ksh2.76 billion. Stanbic Kenya had earlier in the year been rumored to have expressed interest in absorbing loans to ARM from other lenders so as to ease off the tension.
The administrator’s proposal to ARM’s creditors is anticipated to be presented by the end of October 2018.
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