Central bank of Kenya (CBK) Governor Patrick Njoroge says it was time depositors followed facts and desist from social media rumours that may lead to wrong financial decisions making/FILE
NAIROBI, Kenya, Apr 8 – Kenyans have been warned against rushing to transfer their deposits from ‘small’ to ‘big’ banks out of fear they may collapse the Chase Bank way.
Central bank of Kenya (CBK) Governor Patrick Njoroge says it was time depositors followed facts and desist from social media rumours that may lead to wrong financial decisions making.
“The size of a bank does not matter. What matters is governance, business model, the resources and of course their niche which relates to the business model. So the idea of having big banks or small banks being more or less safe; that’s baseless,” Njoroge said on Friday.
Chase Bank, Imperial bank and Dubai Bank were put under receivership within the last few months due to unsound transactions causing bank customers to panic over stability of their banks.
He was speaking on during a media briefing on Friday convened by Treasury Cabinet Secretary Henry Rotich who echoed President Uhuru Kenyatta sentiments of assuring full stability of the financial sector despite the developments.
Rotich says the Treasury is working closely with the Central Bank of Kenya to ensure that there is no unnecessary panic that would hurt any other bank out of massive cash withdrawal like in the case of Chase Bank.
He says the closure of the banks was due to their unique cases that required regulatory action, a move that does not reflect any weakness in the whole banking sector.
“The Central Bank has looked at all banks in the system and isolated banks that faced challenges and addressed this. That is why I want to assure all of you that all the banks in the system are sound,” he said.
The new shakeup in the financial sector come even seeks treasury seeks persuade for mergers of banks especially those government owned to create stronger institutions.
Rotich says it was only logical to create strong banks in the financial system to ensure that they are able to strongly fight both internal and external shocks.
“We are looking at this by having consultations and we will advise soon on what is the best way to go about it. If we consolidate we can have one or two big banks instead of four, of which government owns all of them and competing amongst themselves. It will be voluntary mergers that would be promoted in a way,” Rotich added.
The government has assured compensation of depositors, a process now under the Kenya Deposit Insurance Corporation (KDIC) which is the receiver of the three banks.
