Mr moneybags is my money safe being under you care anymore? You asked me to trust you with it and some of my assets title deeds which you promised to safely keep. You then made the enticing offer of letting you invest my money which you said would grow by a certain percentage after a given period of time. That evening I sat down and thought to myself what a wonderful friend I had found in you. Someone who was willing to take the burden of keeping my money safe which meant i didn’t have to worry about thieves coming for it at midnight and besides that you would loan me cash when I was in need of it. I then said to myself I was the luckiest person alive for having found such a friend in you. But now I am concerned, what are all these stories I keep hearing that you risk closure and that you are swimming in debt? I can’t use my ATM card or even access the money in my account. The same money you were supposed to help me manage relegating me to the role of a rich beggar. You should have alerted me about your imminent closure instead of letting me go to the bank and find the doors padlocked and here I was thinking that we were friends. Your current situation seems to be getting out of hand to a point the president has promised to intervene. As earlier said I am not so sure whether my money is safe with you anymore and that is why I am going to open up my own bank instead. Having my own personal bank means I won’t have to worry about you running away with my money and so I invite you too to join me in the mattress banking business. With this kind of banking I won’t be worried about the auditors or the long queues at the ATM or the fact that your bank branches do not open during the weekends. Am going to invent the pillow account so that I can put my money where my mouth is. The only danger which my mattress bank will face is when the baby decides to piss on my bed or my wife plans to surprise me with a new Maharajah mattress and gives away the old mattress to an in-law with all our life saving in it.
Jokes aside, Dick asked how come banks were struggling financially while they were the very institutions which people go and borrow loans from yet we didn’t hear of any armed robbery in the recent past. Three banks in Kenya namely Chase bank, Dubai bank and Imperial bank are currently under receivership by the Central Bank of Kenya (CBK). Rumor has it that some more banks are about to walk in the footsteps of the former who are struggling with liquidity issues. On Monday as I was reading the Daily’s I saw the annual banking awards being advertised and I wondered who would eventually win the award with all the madness engulfing our banking sector. An interesting fact about Chase bank is coming to learn that the bank had a profit of about 2.36 billion shillings last year and it was even voted the best company to work for in Kenya. It was the country’s 11th largest bank compared to the other 42 banks. There are now 8 interested suitors for Chase bank who are under consideration to help manage it with Kenya commercial bank (KCB) seeming to win the race. Just like the titanic these banks were sailing with the tide but now that the tides have turned they have hit an iceberg and they are sinking faster than they had imagined. Apparently the Kenyan banks are lending more than they should in order to please their ever growing army of customers while the creditors are not able to service their loans. But how did we get here or who is responsible for causing these ripples in our banking sector? It would be no one else other than Mr Patrick Njoroge the governor of CBK, the unbribal man. A man aged 54 years old not married and he doesn’t own property in the country yet he used to earn a salary of 3 million per month at the IMF. The man who refused to accept the luxuries which come with his position and decide to stick with a simple life and live with the church turning down a Range rover and Mercedes plus a house in Muthaiga estate. Among the 9 CBK governors we have had he is the man I feel would help give the Kenyan shilling a fighting chance against the dollar and take our shilling back to its glory days. Unlike his predecessors he isn’t focused on expanding an already flawed system but he first wants to clean up and stabilize the system ensure that it meets the international banking criteria. He has made true to his promise since it’s his first year in office and the banks are already feeling the heat and I have the feeling that the Kenyan banking sector will never be the same again.
Its surprising to realize that this isn’t actually the first time banks are being shut down in Kenya, there was a crisis between 1984 – 1994 which is exactly the same as the one we are currently having which led to the closure of 24 banks. So what we are having today is the perfect case of history repeating itself. They all use the same excuses such as non performing loans and poor management practices. I have come to learn of the new saying that the easiest way to rob a bank is to actually own a bank. Just look at the late GMD of Imperial bank Mr Janmohamed had been disbursing loans amounting to billions of shillings through fraud to his friends and business associates which lead to its eventual closure of Imperial bank while thousands of people are now unemployed and the culprits go unpunished. I must commend how the CBK has handled the Chase bank issue with diligence. Preferring to find a quick solution rather than choosing to play the blame game with the bank’s former directors while the customers remain stranded. The government is advising the banks to lower their lending rates so as to avoid the bad debts which will solve the puzzle of the non performing loans. Then by improving the management we hope that we will never have to walk down this road again.
# Mr. moneybags