Interesting observations on CFC Stanbic Bank. The notes in CFC Stanbic Bank annual report defines Tier 1 (core capital) as follows:
Tier 1 capital consists of shareholders’ equity comprising paid up capital, share premium and retained earnings less intangible assets, goodwill and investments in subsidiary institutions and equity instruments of other institutions.
Taking a look at the restructuring & demerger circular the pro-forma consolidated statement of financial position of CFC Stanbic Holdings (CSH) on page 23 we can get the following numbers.
Total Equity = 17,654 million
Less:
Statutory loan loss reserve = ?
Intangible assets = 1,884 million
Goodwill = 9,350 million
Investment in subsidiaries = 56 million
Equity instruments of other institutions = 0
Natural assumption is that core capital is then 6,364 million
Deposit liabilities = 82,534 million
Is the bank undercapitalized?
How will it raise core capital?
What effect will expanding loans or government securities have on the core capital ratio?
What impact will this have on the bank’s deposit rates in the short term?
What impact will this have on the bank’s interest margin and the bank’s reliance on interest income vs non interest income?
Just thinking out loud.
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