Consolidated Bank of Kenya has turned to the Central Bank of Kenya (CBK) for financial support as it grapples with persistent liquidity challenges that have strained its operations.
The mid-tier lender, which has faced mounting financial headwinds over the past few years, is reportedly seeking emergency funding to stay afloat and maintain critical services amid a tightening cash crunch.
Sources familiar with the matter indicate that the bank has formally requested liquidity support from the CBK, citing a mismatch between its short-term liabilities and available cash reserves.
This move underscores the severity of the financial pressure facing the institution, which has long struggled with legacy non-performing loans and a limited capital base.
Consolidated Bank, which is owned by the government and operates under a development-focused mandate, has faced an uphill task in competing with larger, better-capitalized commercial banks.
Recent financial statements revealed deteriorating capital adequacy ratios and reduced income from core banking operations, further raising concerns about the bank’s sustainability without immediate intervention.
In response to the bank’s financial distress, the CBK is assessing its request within the framework of its lender-of-last-resort function, although officials have remained tight-lipped on the specific terms of the potential support package.
Analysts say the situation reflects broader structural vulnerabilities among smaller state-owned financial institutions, many of which have struggled to remain competitive in a rapidly evolving banking sector.
While Consolidated Bank maintains that it remains operational and committed to its clients, the growing reliance on the central bank raises questions about long-term viability and whether the institution may require deeper restructuring or eventual consolidation with other public-sector banks.
As the CBK weighs its options, industry watchers are keenly observing whether this intervention will be a short-term relief or a precursor to more sweeping reforms in Kenya’s banking landscape.
Written By Ian Maleve
