Former Uchumi CEO Jonathan Ciano at a past AGM. CBK Governor Patrick Njoroge says shareholders need to ask pertinent questions at AGMs. FILE
NAIROBI, Kenya, Apr 19 – The Central Bank of Kenya (CBK) Governor Patrick Njoroge has urged bank shareholders to query statements and governance of the institutions in a bid to keep them accountable.
He says most Annual General Meetings’ major discussions entail who will go home with umbrellas, golf caps and power banks.
He urged shareholders to be keen to query the numbers.
“They need to ask the questions. How did you get all these NonPerforming Loans? Who are you lending to and what are the rules? ” Njoroge offered example questions.
He urged them to check whether their banks are tightening their credit policy and how decisions are made on lending to insiders.
The Governor sort to explain the volatility in the financial sector has brought about transparency in the banking sector.
“Institutions have cleared their balance sheet. Numbers now mean what they say,” Njoroge stated terming it as the banking sector new normal.
The new normal in the Kenya’s Banking sector include transparency and good governance.
The comments come after Chase Bank, Imperial bank and Dubai Bank have been placed under receivership due to unsound transactions causing bank customers to panic over the stability of their banks.
Treasury Cabinet Secretary Henry Rotich says Kenya is overbanked adding that consolidation is vital going forward.
Speaking to Capital FM Business, Rotich says banks need to merge rather than to compete for small markets.
He said he has planned to reintroduce the rejected proposal by the National Assembly to increase the minimum core capital for banks to Sh5 billion from the current Sh1 billion by December 2018.
“We need banks that are a big enough to finance the many projects that we are envisaging in the country and also leverage on the sharing of the knowledge of how institutions run. We will take more time to engage parliament to communicate the advantages of having consolidation in our system,” he explained.
The national assembly in August 2015 rejected the proposal by the finance ministry to increase the minimum core capital for banks to Sh5 billion saying it would stifle the sector’s growth.
