The Co-operative Bank of Kenya has injected additional capital of Ksh 372 million ($3.2 million) into its subsidiary in South Sudan. The unit has accumulated losses of Ksh 3.29 billion ($28.36 million) during its eight years of operation.
The Juba-based subsidiary started operations in September 2013 and operates four branches.
It recorded a loss of Ksh484.41 million ($4.17 million) in 2021, compared to a loss of Ksh1.56 billion ($13.44 million) in 2020.
The Nairobi Stock Exchange-listed lender said it had also written off a cost incurred to implement new software amounting to Ksh 671.56 million ($5.78 million).
Use of the software was discontinued when Co-op adopted a uniform core banking platform, which is now being implemented.
In its 2021 annual report, the bank said it had increased its capital in its South Sudan operations to Ksh2.64 billion ($22.75 million) from Ksh2.27 billion ($19.56 million). ).
“The Co-operative Bank of Kenya Limited has injected additional capital of Ksh 372 million ($3.2 million) into the Co-operative Bank of South Sudan in 2021,” the report said.
In 2013, Co-op Bank, 64.6% owned by cooperative societies in Kenya, invested Ksh 2.27 billion ($19.56 million) for a 51% stake in its subsidiary in South Sudan . The remaining 49% is held by the government of South Sudan under a joint venture agreement.
Last year, Co-op Bank extended the joint venture for three years. The lender said the planned transfer of the minority stake to the South Sudanese cooperative movement had been delayed by economic and political difficulties in the country.
The subsidiary’s only profit came in 2015, at Kshs 849.72 million ($7.32 million).
According to International Accounting Standards 29 Financial Reporting in Hyperinflationary Economies, as of 2016, the South Sudanese economy was considered hyperinflationary.
The country’s civil war, from 2013 to 2020, led to massive depreciation of assets, loss of income and hyperinflation. This led banks to report losses due to the revaluation of assets and liabilities.
Seven years of fighting have led to the collapse of oil production in war-affected areas.
KCB started operations in the country in 2006, Equity in 2009 and Co-op Bank in 2013.
In 2014, KCB closed three branches in South Sudan after the outbreak of war. In 2017, Equity Bank closed seven of its 12 branches in the country.