Reserve Bank of Malawi (RBM) has waived NBS Bank from meeting the capital requirement under Basel II until a planned capital restoration is concluded by December 31 2016, according to an auditor’s report.
Basel II, which rolled out on January 1 2014, is the second of Basel Accords to ensure that the country’s commercial banks are financially sound to safeguard customers’ deposits.
A report by auditors KPMG said on May 13 2016 RBM waived the Malawi Stock Exchange (MSE)-listed bank which had not met the minimum capital requirements as at December 31 2015.
The directive requires that Tier 1 capital, which is the core measure of a bank’s financial strength, and total capital ratio, which measures the bank’s capital position, be at 10 percent and 15 percent respectively, of its risk bearing assets and contingent liabilities.
In view of this, the bank has entered into discussions with technical partners and strategic investors on its capitalisation bid, according to its outgoing chairperson Felix Mlusu.
He said said yesterday the bank has since engaged International Finance Corporation (IFC)—a private sector financing arm of World Bank—who have since expressed interest to invest in the bank.
In the year ended December 2015, the bank made a loss of K195 million due to bad loans which the bank gave to budding businesses a few years back.