CBK hints at re­sum­ing li­cens­ing of new banks

There is huge in­ter­est in the lo­cal fi­nan­cial sec­tor, ev­i­denced by the amal­ga­ma­tion and ac­qui­si­tion of lenders, says CBK boss

The Star (Kenya) - - News Business - RICHARD MUNGAI @Richiy­mungai

The Cen­tral Bank of Kenya plans to re­sume li­cens­ing of new com­mer­cial banks “very soon”, the gover­nor Pa­trick Njoroge said yes­ter­day.

He, how­ever, did not say when the mora­to­rium will be lifted.

CBK freezed li­cens­ing of new lenders in Novem­ber 2015, fol­low­ing con­cerns that most lo­cal banks were un­der cap­i­talised and could not with­stand com­pe­ti­tion, es­pe­cially from the highly cap­i­talised for­eign banks which are mak­ing in­roads in the lo­cal fi­nan­cial sec­tor.

The mora­to­rium, how­ever, did not ap­ply to merg­ers and ac­qui­si­tions.

Njoroge said the lo­cal bank­ing sec- tor has made huge im­prove­ments over the past year, adding that CBK’s su­per­vi­sion de­part­ment has im­proved its mon­i­tor­ing ca­pac­ity.

“We have made huge im­prove­ments so far and I am glad to say that the mora­to­rium will be lifted very soon,” he said dur­ing a press brief­ing.

“There is huge in­ter­est in the lo­cal fi­nan­cial sec­tor and this is ev­i­dent be­cause of the amal­ga­ma­tion and ac­qui­si­tion of banks that we have seen this year. CBK wel­comes this in­ter­est”.

The deals that have been suc­cess­ful in­cludes the ac­qui­si­tion of a 10.68 per cent stake in I&M Hold­ings by UK gov­ern­ment-owned CDC Group in April.

CBK also cleared the ac­qui­si­tion of a 51 per cent stake in the share­hold­ing of Ori­en­tal Com­mer­cial Bank by Bank M of Tan­za­nia in June.

Last week, CBK said it’s aware of a plan by the Mau­ri­tian SBM Hold­ings to ac­quire Fidelity Com­mer­cial Bank.

Njoroge said CBK is in talks with an in­vestor to buy Chase Bank and get it out of re­ceiver­ship sometime dur­ing the first quar­ter of 2017.

The CBK took over Chase Bank in April af­ter a run on its de­posits raised fears it would be un­able to re­pay cus­tomers.

Chase ended a nine-month wave of shut downs which started with the clo­sure of Dubai Bank and Im­pe­rial Bank in Au­gust and Oc­to­ber 2015, re­spec­tively.

Kenya has one of the high­est ra­tio of banks rel­a­tive to pop­u­la­tion in the world.There are 41 banks – in­clud­ing a mort­gage fi­nancier – serv­ing about 44 mil­lion peo­ple, putting the ra­tio at 0.93 or sim­ply one bank for ev­ery 1.07 mil­lion peo­ple.


An aerial view of traf­fic flow near Kenya’s Cen­tral Bank of­fices in Nairobi on Novem­ber 10 last year

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