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Banks Warn of Tougher Measures to Rein in Illegal Cash

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In a move aimed at curtailing the country’s underground economy, the Kenya Bankers Association has vowed to tighten control over Sh1,000 notes. This comes as Kenyans have been given until October 1st  by the CBK to surrender the old notes.

The banking lobby warns that it will be hard for people to return illegally earned money that was stored away from circulation, notably the Sh1,000 note. It is the most preferred because of its high value and also because it is the highest denomination of Kenyan money available.

According to Habil Olaka, the KBA chief executive, demonetization of the notes is a move designed to catch those who hide money that is acquired illegally or is undeclared for tax purposes.

“Controls are in place to ensure that the money does not find its way to the formal financial system easily. The system will be checking whether it is from genuine proceeds or crime, which includes corruption,” he said. He also pointed out that property acquisition would not bypass scrutiny.

“Even if you buy cars, whomever you buy from using cash will still have to identify where the money is coming from, so it is not an easy way out,” he said.

Mr. Olaka expressed confidence in the success of the exercise, noting that banks have started initiating stern regulations reinforce their ability to protect themselves and their customers against potential financial crimes.

Five banks that had been fined Sh392.5 million previously for handling money worth billions of shillings that had been stolen from the National Youth Service (NYS) have already taken steps to minimize the risk of recurrence.

The banks; Equity, KCB, DTB, Co-op Bank and Standard Chartered Bank (Kenya) stated in their annual reports that they had put measures in place to shore up their fight against financial crimes.

KCB mentioned that actions have been taken to reacquaint their staff on all the processes and regulations to be followed in the case of suspicious transactions whereas StanChart cited the enhancement of controls around payments and cash received from the government and government-related bodies.

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Banks

Stanbic Bank Half Years Profit Grows to Sh 4.1B

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Stanbic Bank has reported a 14 percent jump in profit after tax in Half Year results for the year ending June 30, 2019, majorly driven by loans and deposits.

The increase in profit has been attributed to increased lending to customers and efficiency.

During the same period, the bank’s loan portfolio grew by 19% to Sh161.9 billion from Sh136.5 recorded in the period ending June 30, 2018.

Subsequently, the firm’s customer deposits were up by 20 per cent closing at Sh201.6 billion from Sh167.3 billion in last year’s performance.

“The results are a reflection of the unstinting support we continue to get from our clients and partners, despite operating in what remains to be a challenging business environment,” said the company CEO Mr. Charles Mudiwa.

The bank attributes its growth to its change in the regulatory environment which affected both the insurance segment and banking.

“We have managed to navigate the complex operating environment by abiding to our strategy which remains pegged on income diversity and resilience,” adds Mr. Mudiwa.

Abraham Ongenge, the bank’s Chief Financial Officer notes that the bank has learnt how to deal with bad loans which have improved their shares.

“We are now more informed and are seeing efficiencies in credit scoring through new data on client behaviour,” he said.

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Gerald Warui Appointed As Equity Bank’s New Managing Director

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Equity Bank Kenya has appointed Gerald Warui as its fourth Managing Director pending approval by the Central Bank of Kenya. Warui is set to replace the outgoing Polycarp Igathe.

In a statement to the media, the Bank noted that “To ensure a smooth transition of operations Mr Igathe will hand over his duties to Mr Warui before his departure at the end of August,” read the statement.

“The appointment of Gerald Warui follows the board’s acceptance of the resignation of Polycarp Igathe who leaves the position at the end of August,’’ the statement added.

Igathe will leave the bank at the end of August to rejoin his previous employer, Vivo, to take up a newly created role of Executive Vice President of Sales and Marketing for Africa.

Mr. Warui, an insider who has served Equity bank for 21 years, is a career banker and has over 30 years’ experience in banking.

He holds an Executive Master of Business Administration degree from Jomo Kenyatta University of Agriculture and Technology (JKUAT) and is also a Certified Public Accountant CPA (K), and a graduate of Advanced Management Program offered by IESE Business School, Barcelona, Spain.

“The Board congratulates Mr. Warui on his appointment. The Board thanks Mr. Igathe for his dedicated and impactful service to Equity and wishes him well in his new role with one of the Equity’s most valued partners and look forward to deepening the existing relationship across the continent,” reads the statement from the bank.

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African Development Bank Approves $8M Loan to Credit Bank for SMEs

The objective of the facility is to provide access to finance to SMEs, the “missing middle” in Kenya, thereby reducing their financing gap.

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The African Development Bank Group board last Wednesday approved a $8m loan targetted financing to Kenya’s Credit Bank for lending exclusively to small and medium enterprises (SMEs).

The loan is set to mature with five years maturity with a two-year grace period. However, the interest rates was not discoled.

In a statement, AfDB said that the loans will be disbursed to Kenyan SMEs in construction, agriculture, renewable energy and manufacturing sectors.The loan will be used to finance businesses in construction, agriculture, renewable energy and manufacturing.

Credit Bank is a privately-owned commercial bank in Kenya. By end of 2018, the bank had a total assets of 17.81 billion Kenyan shillings ($173m dollars).

“It is financially sound and, as an adequately capitalized tier-3 financial institution, has a strong track record of SMEs, providing working capital and trade finance facilities. As such it is well-positioned to succeed in providing innovative longer term financial solutions to SMEs along several value chains including strategical financial solutions in Kenya,” Stefan Nalletanby, Bank Group director for financial sector development, told the Board.

The objective of the facility is to provide access to finance to SMEs, the “missing middle” in Kenya, thereby reducing their financing gap.

The facility’s proceeds will support transactions aimed at improving their productive capacities thereby enhancing entrepreneurship, job creation, income generation, and sustainable growth, leading to a multiplier effect on the country’s economic growth, according to the Bank.

Credit Bank joins the list of local lenders that are taking substantial loans from global funds such as the International Finance Corporation (IFC) and European Investment Bank, attracted by relatively more favourable terms of the debt, including lower interest rate and longer maturity.

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