Credit Bank PLC has unveiled an ambitious plan to reinforce its capital position through a series of transactions that include a private placement of ordinary shares, the creation of a new class of preference shares, a strategic asset swap and the introduction of a convertible note.
The proposals will be tabled before shareholders at an Extraordinary General Meeting (EGM) scheduled for 19 December 2025.
The move marks one of the most comprehensive recapitalization efforts by a mid-tier Kenyan lender in recent years, signaling the bank’s push to strengthen its balance sheet, expand lending capacity and improve long-term financial resilience amid tightening regulatory demands and growing competition in the banking sector.
At the centre of the proposals is a plan to raise up to KES 4.5 billion through the issuance of 45 million new ordinary shares at a nominal value of KES 100 each.
The capital injection, structured as a private placement, will be offered to existing shareholders and qualified investors in accordance with the Capital Markets (Public Offers, Listings and Disclosures) Regulations.
The board said the funds raised will be channeled towards enhancing the bank’s capital adequacy, supporting future expansion and funding core banking operations. “The proceeds of the issue shall be applied towards improvement of the Bank’s capital,” the document states.
The private placement, if approved, will not constitute a public offer and will instead be guided by negotiated terms between the bank and participating investors. The board is also seeking shareholder authority to appoint professional advisers and sign all regulatory filings necessary to complete the transaction.
In a second resolution, Credit Bank is requesting approval to create a new class of preference shares valued at up to KES 3 billion. The non-voting shares would carry distinct features, including fixed dividends and preferential treatment during winding-up.
The introduction of preference shares provides the bank with additional flexibility in capital structuring. Preference shares, unlike ordinary equity, can attract investors seeking predictable returns without diluting voting rights.
The board said it intends to determine the specific terms of the preference shares in line with the company’s Articles of Association and regulatory guidelines. These terms may include dividend rate, redemption timelines and conversion features.
Shareholders will also vote on a proposal to acquire property owned by Shangrila Villas Co. Ltd, valued at approximately KES 1.2 billion. The parcel of land is identified as LR Number 37/748 & 749 in Nairobi’s upper hill area.
Under the proposed asset share swap, Credit Bank will issue new ordinary shares to Shangrila Villas Co. Ltd equivalent to the value of the property. The property would then become part of the bank’s asset base, potentially strengthening its collateral position and real estate portfolio.
Before acquisition, the land must be fully valued, verified through due diligence and confirmed to be free of encumbrances. The board emphasized that all regulatory requirements, including filing with the Registrar of Companies and obtaining necessary approvals, would be strictly followed.
In another significant proposal, the bank is seeking authority to issue a convertible note in the amount of USD 1,500,000 to ShoreCap, With a maturity period of not less than 5 years. The note shall bear interest at the rate of 6% per annum payable semi annually.
The note would provide short- to medium-term funding and may later be converted into ordinary shares of the bank at a price not lower than the nominal value of KES 100 per share.
Convertible notes have become a common tool for financial institutions seeking flexible capital without immediate shareholder dilution. If conversion terms are met, the debt transforms into equity, providing the issuer with capital stability and reducing repayment burdens.
According to the notice, the board would determine whether the note is fully or partially convertible and would specify the conversion period, repayment terms and exercise conditions.
If the EGM approves the proposal but the note is not converted before the next General Meeting, the conversion price would revert to the prevailing issue price of the bank’s shares.
If all resolutions pass, Credit Bank will be positioned to significantly expand its capital base, solidify its balance sheet and strengthen competitiveness in corporate and retail banking.
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