Higuys,kindly assist on this?

what are the Challenges facing the regulatory structure in Kenya; Electronic Banking,new challenges for bank regulation,problems in regulating international banking?

Thanks

sounds like you're looking for the answer to an exam question/college assignment!

Hi Emlyn,

Here are more stuff that I thought could help you in your assignment...

New challenges for bank regulators (this could also apply to regulating international banking)

Handling banks that have multiple operations in various jurisdictions like Equity, NIC Bank and Diamond Trust Bank. Each country's regulator will be keen to protect their own turf (i.e. local depositors). Such a move could be detrimental to the entire group especially in regards to matters like allocation of group capital, managing group investments and upstreaming of excess funds to the parent.

How to handle banks that have outsourced certain operations to another subsidiary within the group. For instance, I believe Barclays has a central IT operation for its African subsidiaries. How would such a move enable CBK ensure that the Kenyan operation's are operating seamlessly. Also, bear in mind matters like data privacy laws.

Bank regulators have unique challenges in figuring out how to manage banks that have different businesses like insurance, asset management. In certain countries like the UK, this would not be a problem as all "regulators" operate under one roof (the present Financial Services Authority before its disbanded sometime in 2013). In Kenya, all regulators finally agreed in 2009 to have a MoU between CBK, CMA, IRA and RBA.

Lastly, there has been a debate among banking regulators as to how to handle consumer protection. Again, the US and the EU have formalised this by creating the necessary legislation. In Kenya, am yet to figure out who to speak to on such matters. Also, remember that the CBK governor and politicians have have been ranting for banks to reduce their lending rates...so what happens if the banks ignore these requests.

Let me see if I can get for you stuff about electronic banking later.

Regards

Hi Emlyn,

I hope am not too late in repsonding to your query...

Most of the problems that I had in mind with regard to international banking have already been covered in my previous post. The only addition that I have as of now is the intended impact of the Basel III regulations. The regulations are going to be "problematic" in various ways...

For instance, lots of international banks are now being forced to issue more shares to increase their share capital. How will banks go about implementing that without facing the wrath of the current shareholders?

The other will be a requirement that banks hold extra capital when things are "good" (counter cyclical buffer) - thereby limiting the capability of banks to hand out generous dividends.

Also, for banks that are deemed to be systematically important banks, they will be required to hold alot higher capital of about 250 bps more than minimum regulatory capital. Many banks are now requesting their regulators to provide a list (and the criteria) for the "important" banks.

Hope this helps...and once again, I apologise for my delayed response.

Regards

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