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Re-Shaping the Kenya Banking Industry
Obi 1 Kanobi
#1 Posted : Friday, April 08, 2016 10:07:40 AM
Rank: Elder


Joined: 7/23/2008
Posts: 3,017
Chase Bank's collapse should have a significant impact on the future of Kenyan Banking Industry. While many could have dismissed Imperial Bank and Dubai bank as niche banks affecting specific communities, the same cannot be said for Chase Bank.

Chase was shaping into a model Bank, aggressively marketing its brand and gaining acceptance accross all industries and societies.

I can bet the list of those who have been burnt will include every Kenyan, from post teens to the aged, to small businesses to large corporates in Kenya.

Qsn. How will this impact on the Kenyan banking Industry?

We can oviously expect increased scrutiny by CBK, focus on corporate Governance, increased disclosure requirements etc.

Can we expect to see consolidations of small players?

Will the large (Tier 1) banks swallow the small players?

Will their be increased regulatory barriers to entry in this market?

How easy will it be for banks to raise funds?

How about the consumer?

Will interest rates move down in the long run?
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
Ericsson
#2 Posted : Friday, April 08, 2016 10:19:31 AM
Rank: Elder


Joined: 12/4/2009
Posts: 10,702
Location: NAIROBI
Ob1
Be careful about this niche banks.
What I found funny is how the bank owned rafiki.
The business of Rafiki could have fallen under a department in chase bank.
Expect a rally in the big traditional banks as depositors take their money there to the banks which are considered safe and stable.
Even lacklustre ones like Barclays are expected to benefit handsomely
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
Obi 1 Kanobi
#3 Posted : Friday, April 08, 2016 10:32:49 AM
Rank: Elder


Joined: 7/23/2008
Posts: 3,017
I am optimistically hoping for lower interest rate ragime coz the small banks will no longer compete for deposits leaving institutions with huge cash positions like insurers, pension funds, KTDA's etc to either accept the lower interest rates of the Tier 1 banks or go directly for government bonds.
"The purpose of bureaucracy is to compensate for incompetence and lack of discipline." James Collins
whiteowl
#4 Posted : Friday, April 08, 2016 12:56:19 PM
Rank: Veteran


Joined: 4/16/2014
Posts: 1,420
Location: Bohemian Grove
Ericsson wrote:
Ob1
Be careful about this niche banks.
What I found funny is how the bank owned rafiki.
The business of Rafiki could have fallen under a department in chase bank.
Expect a rally in the big traditional banks as depositors take their money there to the banks which are considered safe and stable.
Even lacklustre ones like Barclays are expected to benefit handsomely


There are people who moved from Imperial to Chase because it was "safer" .Now expecting the same to now move to even a "safer bank" after Chase collapse might not be realistic and simple a decision for that matter.
Cornelius Vanderbilt
#5 Posted : Friday, April 08, 2016 1:16:20 PM
Rank: Member


Joined: 8/15/2015
Posts: 817
Dr. Musalia Mudavadi has the right prescription for collapsing banks, bloated domestic borrowing and high inflation, he did it post 1992, he can do it again 2016, lets throw out this quack called uhuru out of the clinic.
VituVingiSana
#6 Posted : Friday, April 08, 2016 1:28:33 PM
Rank: Chief


Joined: 1/3/2007
Posts: 18,121
Location: Nairobi
Obi 1 Kanobi wrote:
I am optimistically hoping for lower interest rate ragime coz the small banks will no longer compete for deposits leaving institutions with huge cash positions like insurers, pension funds, KTDA's etc to either accept the lower interest rates of the Tier 1 banks or go directly for government bonds.

Shame on you Shame on you Shame on you Do you really think Big Banks will share the lower rates with you?
They already have 'cheap' deposits yet charge 2% per month for their loans for most customers. Unless you are a 'AAA' customer like BAT or EABL don't expect to pay 15%.

Small banks are great for many of us who value service. Yes, some will fail. It's competition. Uchumi gave way to Tuskys, Naivas and Nakumatt. Equity was tiny vs NBK or KCB in 2005. How things change.

NBK is technically bankrupt or close to it. It was a 'large' bank which should have been closed down but for GoK.
KCB almost collapsed in the 90s but CBK overlooked the capital shortfall. It was recapitalized. The service sucks.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
mlennyma
#7 Posted : Friday, April 08, 2016 1:29:49 PM
Rank: Elder


Joined: 7/21/2010
Posts: 6,183
Location: nairobi
Cornelius Vanderbilt wrote:
Dr. Musalia Mudavadi has the right prescription for collapsing banks, bloated domestic borrowing and high inflation, he did it post 1992, he can do it again 2016, lets throw out this quack called uhuru out of the clinic.

i tend to differ though i may not support the current regime,the major cause this time round is bank leaders giving themselves loans they can't service or even if they can,the law doesn't allow, the government hand in this behavior is yet to be seen
"Don't let the fear of losing be greater than the excitement of winning."
iris
#8 Posted : Friday, April 08, 2016 1:44:40 PM
Rank: Member


Joined: 9/11/2014
Posts: 228
Location: Nairobi
mlennyma wrote:
Cornelius Vanderbilt wrote:
Dr. Musalia Mudavadi has the right prescription for collapsing banks, bloated domestic borrowing and high inflation, he did it post 1992, he can do it again 2016, lets throw out this quack called uhuru out of the clinic.

i tend to differ though i may not support the current regime,the major cause this time round is bank leaders giving themselves loans they can't service or even if they can,the law doesn't allow, the government hand in this behavior is yet to be seen


That missing hand is why impunity thrives. The government of the day ought to govern.
enyands
#9 Posted : Friday, April 08, 2016 4:46:27 PM
Rank: Elder


Joined: 12/25/2014
Posts: 2,300
Location: kenya
iris wrote:
mlennyma wrote:
Cornelius Vanderbilt wrote:
Dr. Musalia Mudavadi has the right prescription for collapsing banks, bloated domestic borrowing and high inflation, he did it post 1992, he can do it again 2016, lets throw out this quack called uhuru out of the clinic.

i tend to differ though i may not support the current regime,the major cause this time round is bank leaders giving themselves loans they can't service or even if they can,the law doesn't allow, the government hand in this behavior is yet to be seen


That missing hand is why impunity thrives. The government of the day ought to govern.


Opus team needs to be given more muscles by use of steroids .problem is the steroid makers (mpigs)are the biggest abusers of steroids since they are the largest loan defaulters till some if them want the interest capped . This is how far we are.

But I'm optimistic there will be sanity in the long run.its just chaos now.banking kenya will be nyeupe kama Pamba.long live opus dei Mei
kollabo
#10 Posted : Friday, April 08, 2016 5:29:42 PM
Rank: Veteran


Joined: 2/3/2012
Posts: 1,317
VituVingiSana wrote:
Obi 1 Kanobi wrote:
I am optimistically hoping for lower interest rate ragime coz the small banks will no longer compete for deposits leaving institutions with huge cash positions like insurers, pension funds, KTDA's etc to either accept the lower interest rates of the Tier 1 banks or go directly for government bonds.

Shame on you Shame on you Shame on you Do you really think Big Banks will share the lower rates with you?
They already have 'cheap' deposits yet charge 2% per month for their loans for most customers. Unless you are a 'AAA' customer like BAT or EABL don't expect to pay 15%.

Small banks are great for many of us who value service. Yes, some will fail. It's competition. Uchumi gave way to Tuskys, Naivas and Nakumatt. Equity was tiny vs NBK or KCB in 2005. How things change.

NBK is technically bankrupt or close to it. It was a 'large' bank which should have been closed down but for GoK.
KCB almost collapsed in the 90s but CBK overlooked the capital shortfall. It was recapitalized. The service sucks.


Seconded and thirded.

To be honest Chase Bank was the no.1 SME friendly bank in Kenya.


dunkang
#11 Posted : Friday, April 08, 2016 6:50:29 PM
Rank: Elder


Joined: 6/2/2011
Posts: 4,818
Location: -1.2107, 36.8831
kollabo wrote:
VituVingiSana wrote:
Obi 1 Kanobi wrote:
I am optimistically hoping for lower interest rate ragime coz the small banks will no longer compete for deposits leaving institutions with huge cash positions like insurers, pension funds, KTDA's etc to either accept the lower interest rates of the Tier 1 banks or go directly for government bonds.

Shame on you Shame on you Shame on you Do you really think Big Banks will share the lower rates with you?
They already have 'cheap' deposits yet charge 2% per month for their loans for most customers. Unless you are a 'AAA' customer like BAT or EABL don't expect to pay 15%.

Small banks are great for many of us who value service. Yes, some will fail. It's competition. Uchumi gave way to Tuskys, Naivas and Nakumatt. Equity was tiny vs NBK or KCB in 2005. How things change.

NBK is technically bankrupt or close to it. It was a 'large' bank which should have been closed down but for GoK.
KCB almost collapsed in the 90s but CBK overlooked the capital shortfall. It was recapitalized. The service sucks.


Seconded and thirded.

To be honest Chase Bank was the no.1 SME friendly bank in Kenya.



Was it not for 8 greedy directors.
Receive with simplicity everything that happens to you.” ― Rashi

watesh
#12 Posted : Friday, April 08, 2016 7:32:19 PM
Rank: Veteran


Joined: 8/10/2014
Posts: 977
Location: Kenya
kollabo wrote:
VituVingiSana wrote:
Obi 1 Kanobi wrote:
I am optimistically hoping for lower interest rate ragime coz the small banks will no longer compete for deposits leaving institutions with huge cash positions like insurers, pension funds, KTDA's etc to either accept the lower interest rates of the Tier 1 banks or go directly for government bonds.

Shame on you Shame on you Shame on you Do you really think Big Banks will share the lower rates with you?
They already have 'cheap' deposits yet charge 2% per month for their loans for most customers. Unless you are a 'AAA' customer like BAT or EABL don't expect to pay 15%.

Small banks are great for many of us who value service. Yes, some will fail. It's competition. Uchumi gave way to Tuskys, Naivas and Nakumatt. Equity was tiny vs NBK or KCB in 2005. How things change.

NBK is technically bankrupt or close to it. It was a 'large' bank which should have been closed down but for GoK.
KCB almost collapsed in the 90s but CBK overlooked the capital shortfall. It was recapitalized. The service sucks.


Seconded and thirded.

To be honest Chase Bank was the no.1 SME friendly bank in Kenya.



I agree with your statement on Chase Bank, I always admired it from a far. The growth was awesome and it was starting to attract cheap deposits from the middle class.
murchr
#13 Posted : Thursday, April 28, 2016 4:36:54 PM
Rank: Elder


Joined: 2/26/2012
Posts: 15,980
BD wrote:
The Central Bank of Kenya (CBK) has ordered an audit of insider loans across the entire banking system in a tightening of supervision that has caused panic among some institutions...............

The CBK wrote to all external auditors of banks last Friday, asking for an audit of insider loans by May 31.

“The central bank hereby instructs all external auditors of commercial banks and mortgage finance companies to conduct audits on institutions’ insider lending as per the attached terms of reference,” CBK governor Patrick Njoroge wrote in the letter sent to the banks, adding that “the report of the special audit should be submitted to the central bank by May 31, 2016”.
..................

The move is seen as a bid by the CBK to get a true picture of banks’ risk exposures and corporate governance standards in line with the overall theme of cleaning up the banking sector.

Some lenders have, however, termed the regulator’s action hasty, adding that it could have the unintended consequence of causing a new wave of panic in the industry.

“It is good to weed out bad bankers but the urgency with which it is being implemented could cause the failure of more banks,” a CEO of a bank, who cannot be named criticising the regulator, told Business Daily.



Interesting times ahead

http://www.businessdaily...0/-/14efwbd/-/index.html
"There are only two emotions in the market, hope & fear. The problem is you hope when you should fear & fear when you should hope: - Jesse Livermore
.
Swenani
#14 Posted : Thursday, April 28, 2016 4:43:00 PM
Rank: User


Joined: 8/15/2013
Posts: 13,237
Location: Vacuum
murchr wrote:
[quote=BD]The Central Bank of Kenya (CBK) has ordered an audit of insider loans across the entire banking system in a tightening of supervision that has caused panic among some institutions...............

The CBK wrote to all external auditors of banks last Friday, asking for an audit of insider loans by May 31.

“The central bank hereby instructs all external auditors of commercial banks and mortgage finance companies to conduct audits on institutions’ insider lending as per the attached terms of reference,” CBK governor Patrick Njoroge wrote in the letter sent to the banks, adding that “the report of the special audit should be submitted to the central bank by May 31, 2016”.
..................

The move is seen as a bid by the CBK to get a true picture of banks’ risk exposures and corporate governance standards in line with the overall theme of cleaning up the banking sector.

Some lenders have, however, termed the regulator’s action hasty, adding that it could have the unintended consequence of causing a new wave of panic in the industry.

“It is good to weed out bad bankers but the urgency with which it is being implemented could cause the failure of more banks,” a CEO of a bank, who cannot be named criticising the regulator, told Business Daily.



Interesting times ahead

http://www.businessdaily.../-/14efwbd/-/index.html[/quote]

KRA had fought and rejected the increase in provision of NPL since it would have meant a decrease in profits translating to lower taxes
If Obiero did it, Who Am I?
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