Today the Receiver Manager of Imperial Bank, the Kenya Deposit Insurance Corporation and the Central Bank of Kenya issued a notice of, and a timeline for, the recovery of Imperial Bank.
This is a suprising about-turn from the perception for much of period since Imperial Bank was suddenly closed in October 2015, in which there appears to have been a leaning by the receiver-manager that Imperial was beyond recovery and that it should be liquidated. Today’s notice comes exactly a year after NIC Bank was appointed to liquidate Imperial bank assets and pay off Imperial’s depositors.
Now, the envisioned recovery process is similar to one being used for Chase Bank which is open, but still in receivership. Expressions of interest are invited from strategic investors. They will be evaluated and the short-listed ones will be given further confidential data to enable them to do due diligence and come up with formal offers that they will present to the to the receiver-manager to decide on. The process will take about a year.
This is a nice sign, but is it one that should have happened earlier? In the same period the fate of other troubled banks in the region has been concluded – in Uganda (Crane and Imperial) and in Rwanda (Crane, which was bought by Kenya’s CBA last week from DFCU of Uganda.
Jaindi Kisero writes about Kenya banks this week with a note of concern:
I have been reading through data based on a review of the Q1 2017 regulatory disclosure that banks must publish quarterly in fulfilment of the requirements of prudential guidelines by the Central Bank of Kenya. The statistics make for very depressing reading.
- Big banks are not lending to smaller ones; they are concentrating on lending to their fellow tier 1 banks.
- Small banks are lending to one another at rates more than double what the big one are doing among themselves.
- A number of small banks have been taking deposits at rates higher than the 7% limit set by the rate-capping law.
- The number of banks that are utterly dependent on the Central Bank window have increased to four.
- A number of the small banks are yet to reprice their loans and are, therefore, still charging customers rates above the rate cap of 14%, running the risk of regulatory penalties.
- Banks have continued to lend money to companies that are not able to pay back. The banks are usually reluctant to discontinue lending out of the fear that such action will recognise their own losses on the loans.
In sum, the data reveals that too many of our small banks are facing a dangerous cocktail of declining margins, declining liquidity, and deteriorating asset quality.
Chase Bank: The Business Daily has unveiled the results of the bidding for Chase Bank in an ongoing receivership exit process that has been organized by the Central Bank of Kenya (CBK) .. “France’s third-largest bank by assets, Societe Generale, and Mauritius-based SBM Holdings are the frontrunners to acquire troubled Chase Bank and its subsidiary, Rafiki Microfinance.. The two have emerged top of the list of investors, including KCB Group, I&M Bank, Stanbic Bank and South Africa’s First Rand, who had expressed interest in taking over the Kenyan lender.”
Dubai Bank: The bank is in liquidation and the Kenya Deposit Insurance Corporation is calling on all depositors and creditors of the bank to show up and file their claims. During the court process, before liquidation, few depositors showed up after bad debts stalled the closed bank.
Imperial Bank: A court has just granted a 90-day extension of the receivership. It is “without prejudice” which means that the extension does not imply an endorsement of any the ongoing discussions between the shareholders of the bank, the CBK, and the KDIC. The statement ends with “a tentative timeline will be issued in the coming days.”
DIB Bank Kenya has officially commenced operations with services at three new branches – two in Nairobi (Westlands, Upper Hill) and one in Mombasa (Kilindini). It is a subsidiary of Dubai Islamic Bank, the largest Islamic bank in the UAE with $50 billion in assets
Kenya has two other fully Shariah banks – Gulf African and First Community who have been operating for just over a decade now. Other large banks also offer Shariah/ Islamic banking products and services including Barclays, KCB, and also at Chase Bank.
There are also insurance companies, and recently financial products like ETF’s and bonds that are Shariah compliant.
DIB has no relationship or association with Dubai Bank Kenya that was placed into liquidation by the Central Bank of Kenya in 2015.
Thursday saw the official launch of the Caritas Microfinance (MFI) Bank in Nairobi. Caritas MFB, which is owned by the Catholic Archdiocese of Nairobi, was licensed by the Central Bank of Kenya in June 2015. It has since mobilized almost Kshs 400 million in deposits and advanced Kshs 250 million of loans.
Caritas plans to go from having two branches, now serving 10,000 customers, to five by year-end and increase its authorized agent network from 16 to 50. Already 70% transactions are done using mobile banking and through a partnership with Cooperative Bank, Caritas customers can use Coop Bank ATM’s and visa cards for purchases and this will enable another potential 100,000 “unbanked and under-banked” members of 200 self-help groups in Nairobi and Kiambu counties to access formal banking services.
MFI’s were excluded from the interest cap law of 2016. Other deposit-taking microfinance bank institutions include Choice, Daraja, Ideal (formerly REMU), Maisha, SMEP, Sumac, U&I, and Uwezo. Larger ones include KWFT and Faulu as well as the Chase Bank-owned Rafiki MFI that was quite large and growing fast. It is independent of Chase Bank but a lot of its future growth is dependent on the outcome of the Chase receivership.