Following the receivership of Chase Bank Kenya over financial trouble, the Central Bank of Kenya (CBK) has announced that the bank will reopen on April 27 under the Kenya Commercial Bank’s (KCB) management.
Customers will have immediate access to their deposits up to a maximum of Sh1 million, CBK says.
167,290 accounts, equivalent to 97 per cent of accounts or 6 per cent of total deposits, will have their funds available in full.
The deal with Kenya Deposit Insurance Corporation, signed at 8.30am on Wednesday, will see the bank’s 62 branches reopened by next Wednesday, April 27 2016.
The CBK had received nine proposals, including six from local investors, two foreign and one from existing Chase Bank shareholders. The bank’s shareholders had proposed to inject more cash for its revival.
KCB was chosen for their offer to re-open the bank immediately as well as their credibility and cash to support operations. The reopening will be followed by their eventual acquisition of a majority stake in the bank.
Other announcements from the acquisition are as follows
Deposits in excess of Ksh.1 million will be made available in a structured manner, details of which will be released in the near future.
The moratorium on payments to creditors and lenders remains in place. However, the Manager will correspond with them in the near future with details of how these would be dealt with.
Ongoing efforts to collateralize existing loans and recover funds that were obtained irregularly or are non-performing will be stepped up. Existing borrowers are required to continue servicing their facilities.
CBK and KCB will ensure that Chase Bank Ltd (In Receivership) will have adequate liquidity for its operations.
KCB will make available a management team that will assist in the receivership.
Patrick Kagunya is the Director Financial Advisory at Getworks and Chief Executive Officer at Wescotts Financial Consultants. He offers some insight on how to tell if your bank is in trouble.
With Chase Bank in receivership most depositors must be asking themselves so which bank is safe ?
Spotting trouble isn’t easy (witness the current crisis), but there are some warning signs, if you know where to look. The KDIC and CBK keeps these quarterly financial reports on every Kenya financial institution.
Clearly, economic conditions have changed in the last three months, and as detailed as these reports appear to be, there still are plenty of unknowns. However, these reports do offer some clues as to your bank’s ability to weather the storm.
First, a healthy word of warning: A few numbers in a report don’t mean you should snatch your funds and run for cover. If you’re worried that your bank might teeter, don’t panic. Talk at length with your financial adviser before making any sudden moves. If you want some extra protection in the meantime, think about diversifying your risk by making additional deposits in a few other banks.
One important measure of a bank’s financial stability is its risk-based capital ratio. By law, commercial banks need to keep a certain amount of capital on hand to cushion their loan portfolios. The CBK mandates that a bank’s risk-based capital be no less than 8% of its total assets.
Next, look at the bank’s loan-to-deposit ratio. Even if your bank didn’t lard up on mortgage-backed securities, it might still be “loaned up”–meaning that it has maxed out its percentage of loans to deposits on hand. The larger that percentage, the greater the risk the bank has taken on. If customers begin to pull deposits, the bank might be suddenly strapped for cash.
Healthy loan-to-deposit ratios typically fall between 95% to 105%,. Venture much higher than that and the bank could be courting trouble. To find this ratio, divide “loans and leases, net of unearned income and allowance” by “deposits”.
A third metric is the percentage of the amount of non-current loans (those 30 days or more past due) vs. total amount lent. Some fraction of those non-current loans will have to be written off, eating into the bank’s precious capital.
“When 10% of your loans are non-performing, that starts to become very problematic,”.
To calculate your bank’s percentage, divide the total amount of loans that are 30 days or more past due by total loans and leases.
If your bank is struggling and the KDIC takes it over, know that you may not have access to your funds for several days during the change-over period. To be safe, small-business owners should have a week’s worth of operating expenses deposited in more than one bank.
Banking and finance apps are one of the most sought after pieces of innovation in Kenya aiming to serve millions of citizens who are banked with a possibility of luring the unbanked to diverse product offerings.
While innovation and creativity in the Kenyan banking industry has been limited to SMS banking for a while, accredited finance institutions are quickly targeting native mobile application users more on the Android platform than any other mobile operating system.
We have come up with a list of the available apps on various platforms prominent among them being the Google Play Store.
This banking apps at the least will ease your hassle and reduce the time you have to spend in queues in various banking halls.
Barclays Bank of Kenya
Along with its Internet Banking service, the Barclays Bank of Kenya is among the banks in Kenya to have a complimentary mobile application launched in June 2013 that serves both personal and business clients. The application is available on the android platform for versions above 2.2. So far between 5,000 to 10,000 clients are using the application.
You can download Barclays Bank of Kenya app from the Google Play Store here.
Like most banking applications in Kenya, the Ecobank mobile banking allows its banking clients to top up their mobile phones with airtime from major mobile operators such as Safaricom and Airtel. Internet and External fund transfers are on the go which cuts down on the effort to meet the bankers in person. Available on the android platform for versions above 2.2, the app has between 1,000 to 5,000 users.
Being among Kenya’s most profitable banks, Equity Bank has a mobile banking application dubbed Eazzy 247 that opens up an opportunity for its clients to access their account financials including statements as well as pay bills such as electricity, water, HELB, DSTV bills and others. The app is available on the Google play store with downloads between 10,000 – 50,000. You can download from the Google Play Store here.
The application is also complimented by unofficial apps such as the Equity Direct Mobile which is a money remittance service serving the Kenya community and a less popular Equity Virtual Banking which features ATM locations among other features.
Family Bank (Pesa Pap)
Family Bank is a financial organization that is built around the idea of family and is popular with social groups and communities. Their laid back mobile application developed by Craft Silicon is efficient for servicing utility bills from various service providers in Kenya. The application is available on the android platform for versions above 1.6. You can download from the Google Play Store here.
NIC Bank Kenya
The NIC Bank is not left out when it comes to serving up its clients with the latest innovation. Though basic, the mobile banking application offers everything a banking client is looking for including online merchants and mobile money options. The application is available on the android platform for versions above 1.6.
Though not hosted on the play or app store, KCB’s mobile application can be download on their website offering the ability for users to send money to their mobile money accounts such as M-Pesa, check their balance as well as transfer funds. The application compliments the USSD service accessible via *544# on Safaricom Lines.
The bank has an attractive mobile banking app known as mfukoni which translate in English from Swahili as ‘In the Pocket’. Othe than, the application has an attractive interface and goes beyond that to provide service beyond the usual mobile application. Mfukoni also provides access to services such as insurance and unit trusts that are a product offering by the modern financial institution. You can download from the Google Play Store here.
The have a separate application for tablet devices available for versions 3.1 and up.
Banking will remain a core primary service but sure, banking as we know it will continue to evolve decade after decade.
Leave a comment and don’t mind pointing us to any apps that might have been missed.