CBK denies banking sector is facing imminent collapse

By Carol Njenga

Central Bank has denied reports that the banking sector in Kenya is facing imminent collapse saying its normal for banks to experience liquidity problems.

CBK governor Patrick Njoroge says the industry is currently going through a re-alignment phase which will leave the industry solid.

This comes even as micro lender refuted rumors that it’s facing imminent collapse due to panic withdrawals.

The micro finance is 75 percent owned by Chase bank which was placed under statutory management by CBK on Thursday.

The placement of Chase Bank under the management of the Central Bank has thrown the banking industry in Kenya into a tail spin, five months since another lender; Imperial bank was placed under receivership by the market regulator.

With a population of 44 million people in Kenya, there are 42 commercial banks which analysts say is a crowded market.

This is likely to change for the industry is expected to witness increased mergers and acquisitions this year.

Equity bank and KCB have already announced plans to make acquisitions while I&M is set to acquire Giro Bank.

The governor insists that the country’s banking sector is safe and robust even after the three banks; Dubai Bank, Imperial Bank and now Chase Bank were put under receivership.

He urges shareholders to be more vigilant to ensure the accounts reflects the true and fair position of a bank, a case point  chase bank where top directors were major beneficiaries of insider lending and unsecured loans that put the bank in a tight liquidity corner.

  

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