Nairobi, Nov. 12 -- Eight commercial banks would require up to Sh16.5 billion in fresh capital to cover for revaluation losses from Treasury bonds if the Central Bank Rate was to be hiked by one percentage point, underscoring how exposed lenders are to government securities.

A stress test conducted by the Central Bank of Kenya (CBK) in May to gauge the stability of the banking sector revealed that an increase of the CBR by the monetary policy committee would cause government bonds held by banks, as available for sale or held for trading, to lose value, eroding their capital position.

Published by HT Digital Content Services with permission from Business Daily....