CBK hints at resuming licensing of new banks

The Central Bank of Kenya plans to

resume licensing of new commercial

banks “very soon”, the governor Patrick

Njoroge said yesterday.

He, however, did not say when the

moratorium will be lifted.

CBK freezed licensing of new

lenders in November 2015, following

concerns that most local banks were

under capitalised and could not withstand

competition, especially from

the highly capitalised foreign banks

which are making inroads in the local

financial sector.

The moratorium, however, did not

apply to mergers and acquisitions.

Njoroge said the local banking sector has made huge improvements over

the past year, adding that CBK’s supervision

department has improved its

monitoring capacity.

“We have made huge improvements

so far and I am glad to say that the

moratorium will be lifted very soon,”

he said during a press briefing.

“There is huge interest in the local

financial sector and this is evident because

of the amalgamation and acquisition

of banks that we have seen this

year. CBK welcomes this interest”.

The deals that have been successful

includes the acquisition of a 10.68 per

cent stake in I&M Holdings by UK government-

owned CDC Group in April.

CBK also cleared the acquisition of a

51 per cent stake in the shareholding of

Oriental Commercial Bank by Bank M

of Tanzania in June.

Last week, CBK said it’s aware of a

plan by the Mauritian SBM Holdings to

acquire Fidelity Commercial Bank.

Njoroge said CBK is in talks with an

investor to buy Chase Bank and get it

out of receivership sometime during

the fi rst quarter of 2017.

The CBK took over Chase Bank in

April after a run on its deposits raised

fears it would be unable to repay customers.

Chase ended a nine-month wave

of shut downs which started with the

closure of Dubai Bank and Imperial

Bank in August and October 2015, respectively.

Kenya has one of the highest ratio

of banks relative to population in the

world. ere are 41 banks including

a mortgage financier serving about

44 million people, putting the ratio at

0.93 or simply one bank for every 1.07

million people