so how have u pointed out my untruths? it was one untruth which i corrected with a solid fact...u havent given any figure to dispute anything i have said and i had to correct myself...please list wat lies you think i am peddling...i will wait..

@kizee. Aahh yes you're quite right...on dtk and some other stuff...I don't know what business model they use, but I guess KCB's Tz sub needs some serious re-engineering, so it looks like we all owe you a drink (at least I do)...but dude it's furahi-day, so I aint gonna argue it further. Peace.

@scubidu - DTB is focused.

They are very good at what they do & sorta entrepreneurial...

I had to make a payment in Uganda for a deal. I paid in the cash (in KES & less than $10,000) into DTB (Westgate) at 5pm (Day 1), flew into Entebbe/Kampala early AM (Day 2) & the cash was available to me on Day 3 in KES or UGShs less wire fee (KES 2,400) & a forex spread for the conversion into UGShs.

All I had to do was show my passport (same ID as presented in Kenya) as proof.

Can u imagine the stress with KCB or BBK?

It is Furahiday... Take a chill pill... At some point I was enjoying needling you... but I dont want to spoil your weekend... we have our politicians to do it for us!

BTW, you are right, KCB TZ has only made a profit ONCE in 8 years, even that might be suspect, one-time or they got lucky!

Sudan is interesting... the problem/fear I have is the relationship between S.Sudan & N.Sudan can turn nasty. Fast.

The good news (as I understand it) is that most of KCB's cash assets are in US$. So the risk of sustantial loss is negligible. They can airlift the cash to Kenya or simply 'wire' the electronic amounts to Kenya/USA as well.

Unless KCB uses Good4Shyte...

I will pray on Sunday... just not for the same things as baba jimmy & baba fidel!!!

Huh? Blacklisted? By whom?
That is crazy... so how do S.Sudan banks handle funds? All of it is flown in & out?

I am not a banker but is there a way to send electronic US$ funds without going thru New York?

In this day & age 'electronic' funds makes sense! Wow... I had no idea... never been to S.Sudan (or north)...

BTW, what do you mean when you say 2 weeks of reserves?
[When I say cash... I mean US$ held by KCBsudan not waiting for sudanese pound to be converted to US$...]

@wa_ithaka. The banking system we operate under allows KCB to write a 8bn long term loan without KCB even receiving any deposits…the CBK needs to see that two things are available, reserves (which they can lend through omo) and capital (which is where the 15bn comes in). These are the two things that constrain lending.

This is a concept I came to learn and vvs alluded to it in his post, post 53. He advises some concepts to read over. In addition I suggest u visit the following website http://www.moneyasdebt.net/ and go to reference links (on the non-flash page). Download a document called Modern Money Mechanics (it’s on the left)…it’s an interesting document about our banking system (read the first ten pages). Nice weekend dude, ive gotta Pili waiting for me and it's about time I left work!

Wa_ithaka. The two capital ratios core capital/deposit liabilities and core capital/risk weighted assets may help explain some statements I made above. With a 15bn injection of capital, KCB’s deposit liabilities (DL) and risk weighted assets (RWA) can grow meaning KCB can now loan more by leveraging on that capital base. If u take KCB’s current RWA and DL, for a 1b injection of long term capital, KCB can write 9b in long term loans (RWA rises), which will then lower the ratios back to 2009 levels-12.8%/14.8% (u can do this experiment practically right now with a calc). You can make the same observation with a reduction in the CRR, lowering it does raise funds, yes, but also raises leverage.

These capital ratios were put there by the Central Banks globally to limit growth in RWA and DL; much like the reserve ratios they limit loan growth becoz of the implications to money supply. Central Banks emphasize on growing capital periodically (e.g., Lloyds TSB raising capital), becoz that’s out of their control. Markets were banks have low capital see their stock markets decline first (read: rights issues)-is why Kimunya put emphasis on raising capital by 2012. Finally a word on accounting…u need to get hold of a banker, ask him/her the changes (debit & credit) in the balance sheet items (i.e., loans, cash, DL, etc…) when a bank writes a loan and when a loan is written off..further clues to above issues.

I think growing a strong/huge balance sheet is key to attracting business internationally, particularly if you’re a regional bank. If I’m an oil importer, like Kenol, I’m more likely to bank with KCB becoz they’re trusted by the corresponding bank abroad. You geta free bailout in the US, CBN in Nigeria consolidated banks for strengthen, 4 banks control SA market, big banks are included in syndications, big banks have big capital thus capacity to lend to big projects, the recent Kenyan M&As (CFC+stanbic) to create financial supermarkets... Big is best in banking.

Wa_ithaka. You're being kind today, pliz don't tell me I'm slow . You remember Barclays issued a medium term note in 2008 aka a corporate bond. In their annual report they wrote "medium term notes are...for the development of the banks business and to strengthen its capital base". Didn't have to google that.

In the MD's statement he mentioned "from the issue, we were able to grow funding to support long-term lending to our customers...". So yes a bond issue raises funds, but as I explained above the banks count more on leverage of those same funds (funds will be spent on other things, not only on lending).

The fact that the capital is issued as a bond is irrelevant. At this point you may want to google the definition for supplementary capital then download Barclays 3rd qtr results for 2008. That should explain your confusion concerning capital raising (core capital + supplementary capital = Total capital).

Paying the dividend was necessary or how else would investors be enticed into buying future rights...Martin's head is functioning right, he's grown the loan book and pre-tax profits...Central Banks will help always help those big banks that are "to-big-to fail". Case in point CBK pumping in reserves and US Fed paying interest on reserves (plus bailouts).

@VVS. you're quite right, I believe it is 50% of subordinate debt (I think). I commend wa_ithaka for actually bringing this debate up, it's an interesting topic. I have found that the tricky thing about banking is the accounting treatments, which is why we should look thoroughly at all the items in the balance sheet and explain why they change.

Scubidu- for the sake of future debates, I'll yiedl on the whether a corporate bond can be termed as capital.
However, on the dividend and the too-big to fail, I recommend another couple hits on google. The banks that you've mentioned (i.e. UK/US) mostly differed dividends in exchange for capital raising measures and govt assistance where this was made. On the too-big-to fail, please google that jointly with moral hazard. The reason that you don't want banks to get too big to fail is that if KCB was to fail tomorrow, note that it has a balance sheet of Ksh191bn which is 25% of the last budget.