It’s bad news when a commercial bank collapses; it’s frightening when three of them go under within just eight months in a single market.
The back-to-back collapse of mid-tier Chase Bank, Imperial Bank and Dubai Bank sent chills across the Kenyan financial sector – eliciting a scramble for remedial measures, including consolidation and review of capitalization requirements for banks.
Chase Bank’s operations were taken over by the Central Bank of Kenya (CBK) in April after its management failed to declare KES8 million ($80,500) in insider loans, causing panic withdrawals and a run on the bank.
Imperial Bank was taken over in October after fraud was uncovered. Two months earlier, smaller lender, Dubai Bank, was put into receivership.
This state of affairs triggered anxiety on the health of the banking sector in Kenya even though regulators and the National Treasury have gone all-out to downplay the concerns, calling the bank closures “isolated cases”.
“I want to assure my fellow Kenyans that our financial sector remains strong and stable. The recent placing under receivership of three banks was due to specific factors related to these banks and not the whole banking sector,” says Finance Cabinet Secretary Henry Rotich, as he sought to calm nerves over the health of the East African nation’s financial sector.
But even with the assurance, Rotich and his team at the Treasury are not resting. They are planning a raft of strategies, including consolidation, in an attempt to clear weak lenders from the Kenya’s banking sector and help restore confidence through larger and better capitalized outfits.
Rotich plans to re-introduce higher capital levels for banks to guarantee their financial health.
“Last year, I did table in this house specific measures to increase the capitalization of banks in order to ensure we have a strong and stable banking system but our efforts were not successful,” Rotich told the Kenyan Parliament in June when he presented his budget speech.
In 2015, Kenya’s legislators shot down Rotich’s proposal to raise commercial banks’ minimum capital fivefold to KES5 billion ($50 million) within three years, after CBK Governor Patrick Njoroge said such a move would strangle smaller lenders.
Rotich, however, is keen to push through the higher capital requirements this time round and by extension trigger consolidation of weak lenders in an attempt to prevent further financial glitches among the 42 licensed commercial banks.
“I am seeking to introduce the proposals and I am hopeful that members will look at them more favorably in light of the recent developments in our banking industry,” says Rotich.
The impending changes in bank capitalization requirements have already triggered action among small lenders that are keen on complying.
Midsized lenders, presently feeling the pressure to consolidate to capitalize on economies of scale and remain relevant, have already taken to mergers or pacts with private equities to boost the asset position.
I&amp;M Holdings, which has stakes in banks in Kenya, Tanzania, Rwanda and Mauritius, is set to finalize a KES5 billion ($50 million) deal to merge Giro Commercial Bank with its subsidiary I&amp;M Bank.
“In our view, the acquisition will have minimal strategy disruption given similarities of the two banks – both have conservative balance sheets and mainly target middle- to high-income customers as well as SMEs (small and medium enterprises),” the listed lender said in a statement in June.
Small-sized Kenyan lender Oriental Commercial Bank formally rebranded to M-Oriental Bank in June following the acquisition of a 51% stake in the shareholding of Oriental by Bank M Tanzania.
The Kenyan banking industry has also witnessed several other acquisitions recently, including the 75% purchase of Spire Bank (formerly Equatorial Commercial Bank) by Mwalimu Sacco and Nigeria’s Guaranty Trust Bank acquiring Fina Bank.
In 2014, investment group Centum also completed the acquisition of K-Rep Bank (now Sidian Bank) in a deal that raised Centum’s shareholding from 7.54% to 67.54%, having been a minority shareholder in the bank since 2004.
Centum’s acquisition was effected through Bakko Holdco Ltd, a non-operating holding company, to conform to CBK guidelines.
Kenya’s largest bank by asset base, KCB Group, is also looking at medium-sized lenders to buy as part of an expansion plan and is building up capital to boost its acquisition war chest.
“We will look for businesses where there can be synergy, where there can be ability for us to scale up, so medium-sized banks will be areas that we are focusing on today,” KCB CEO Joshua Oigara told Reuters.
In May, KCB Group shareholders gave a nod to the lender’s plan to raise KES10 billion ($100 million) through a rights issue later this year to boost its capital levels. KCB’s total capital stood at KES79 billion ($795 million) at the end of 2015.
KCB Group is expected to acquire a majority stake in Chase Bank after it was recently appointed to manage the mid-tier bank that only re-opened after a brief closure due to liquidity problems following a run by panicked depositors.
The government is also considering merging National Bank of Kenya (NBK), Development Bank of Kenya and Consolidated Bank, which it owns, in a bid to take advantage of having a large lender.
“We are making progress on the issue of consolidation because we now have a consultant who will soon be advising us on how to move. We expect to consolidate the state banks into one or two banks very soon,” Rotich said in April.
The changes in bank capitalization have also seen an inflow of private equity to try and boost the books of Kenyan banks.
In March, Fidelity Commercial Bank announced British private equity and asset management firm Duet Group had acquired a significant stake in the small lender. In the deal, Fidelity Bank will receive KES1.9 billion ($19 million) from the sale and boost its capital position, which was narrowly above mandatory requirements following an increase in adequacy ratios in 2015.
Furthermore, Norway’s investment fund for developing countries, known as Norfund, in partnership with NorFinance, an investment firm created by Norfund and private investors, purchased a 12.22% stake in Kenya’s Equity Group Holdings for an estimated KES26 billion ($261 million) from private equity group Helios Investment Partners.

Hoping For More  To Bank On

No one said it would be easy!
As women of Africa we have had epic battles to fight, from freeing ourselves from the shackles of colonized and patriarchal mindsets, to being pigeon-holed by our multi-textured identities shaped by race, gender, class and cultures. But we have started to change that: initially we did this hesitantly, often unsure about our own strength, both physical and emotional, as well as our worth – and, more often than not, cowed by the often unquestioned power-based status quo in our societies and institutions, and the barriers that kept us out.
But now we are braver, wiser and more reliant on our own instincts and leadership traits; our emotional and spiritual intelligence; our formal and informal knowledge; our experiences and our relationships, and so we have begun to carve out the future we want for ourselves in bigger, bolder and more audacious steps. In general, African women have started to own their voices and make their mark in domains that were previously male-dominated. Why?
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I like to posit that one of the primary reasons for this phenomenon is that women are no longer afraid of owning their ambition; we have finally learned that ambition is not a dirty word. Previously we would shy away from asking, negotiating, speaking up, recognizing our worth and claiming the recognition we so rightly deserve. From war-torn countries to boardrooms to our homes, we are no longer wearing the victim cap but have replaced it with our open ambition – not driven primarily for self-centered, egocentric reasons but because we are deeply passionate about creating better adjusted societies. Most of us are, after all, mothers or mothers in the making, and so instinctively nurturing – and which mother in which country does not want a better life for her child?
From women who are playing significant peace-keeping roles in their countries, to the survivalist female entrepreneurs operating as the third economy in hugely disparate nations, to women who have paved the way for more women in the boardrooms of corporate enterprises and government structures – all have claimed the right to their goals and aspirations.
Huge sacrifices have been made by women who came before us, particularly those who fearlessly stood up to oppressive regimes and allowed us to take our seats around the tables of power. You and I are without a doubt still making sacrifices and may obtain many scars for openly demonstrating such a determined sense of civil or commercial purpose. But instead of hiding our scars let’s wear them as badges of honor.
I have quite a few scars myself, but through my experiences I have learned that what does not kill or damage me is character-building and has given me  an inner strength and resilience I did not know I possessed. I was talking to a South African male leader recently and he said something very interesting; the gist of it went like this: “I was never an insider and being the outsider from a young age made me fight for it, and work harder and smarter – and made me infinitely more hungry.”
I think this can be argued as a case for women who have never been the insiders in a male-dominated society and business environment. In addition to being the outsiders we also possess traits that men simply don’t have. According to an extensive study conducted in 2013 by John Gerzema, named one of the Top 100 Thought Leaders in Trustworthy Behaviour 2014 by Trust Across America, and Michael D’Antonio, women are intuitively more expressive in their leadership style, they use flexibility as a way of getting things done, and they see winning as a group construct. These are primarily female leadership traits, the study concluded, and are what we want in our leaders today – that is, leaders who have the capacity to relate to ordinary people and their points of view.
Simply put, we are the leaders we have been waiting for. Our nation, our society and our corporate enterprises need leaders like us; and the young women and men in our societies need role models like us. Gerzema and D’Antonio articulate it beautifully in the title of their 2013 New York Times bestseller, The Athena Doctrine: how women (and the men who think like them) will rule the future.
That future is now. Women need to be proud of their ambition and, in realizing it, must be prepared to stave off whatever slings and arrows the insiders may throw at us.
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The writer is the Executive Director of the Centre for Leadership and Dialogue at the Gordon Institute of Business Science (GIBS) in Johannesburg,
South Africa.

Ambition  Is Not A Dirty Word

Esther Mbabazi was eight when her father died in a plane crash in the Democratic Republic of Congo. This could have deterred her childhood dream of being a pilot. It didn’t and Mbabazi found comfort in the skies.
“We don’t stop driving because loved ones die in car crashes, why stop now? However it just made me realize the value of lives I have on board, so safety is definitely a big deal to me as a pilot.”
Safety is important in most passengers’ minds when turbulence hits. Usually there is a reassuring announcement made by a mature male. Many passengers are surprised when they hear a female voice saying:  “Ladies and gentlemen this is your captain speaking. We are experiencing a bit of turbulence on our descent. Just sit back we’ll be landing shortly.”
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In 2013, Mbabazi became Rwanda’s first female commercial pilot. It was a dream that began at the age of four where she would see planes take off from Bujumbura airport, close to her home in Burundi. At the age of seven, she took her first flight on a family trip to the Unites States (US). It was love at first flight.
“I didn’t get to go into the cockpit but I knew this is where I belonged, back then they’d give kids back packs and I was just an excited child on the Virgin Atlantic.”
After high school, Mbabazi started training at Soroti Flight School, also known as East Africa Civil Aviation Academy, in Uganda where only two women made it through. She secured a scholarship from RwandAir to continue her commercial license training in the US.
“At Flight Safety Academy in the US, the number [of female students] was bigger. There were up to 20 female students from all over the world including the first female Saudi Arabian pilot, Hanadi Hindi among others from Asia, Europe and South America. There were about 10 female instructors and the chief pilot, Nancy Ritter, was a female too. But as many as we were we didn’t even make up 5 percent of the academy.”
Two and a half years later, Mbabazi made it.
“Making history was not my goal, achieving my goals is what I delight in, like I said, do what you love and people may appreciate it. After getting my commercial license I didn’t celebrate, I was looking forward to the next cockpit I’ll get into. This, for me, is my way of celebrating, flying!”
Mbabazi believes she is in the minority because of the belief that flying is a man’s job. She is delighted that she has paved the way for many dreamers in proving the critics wrong.
“I like to view my challenges as the reasons to celebrate having reached my goal. As a woman in a male dominated field, no doubt, you have to prove yourself, but hard work always pays off.”
Mbabazi is among many women in Rwanda who are the backbone of the country. Rwanda is going through great lengths to rebuild itself from the 1994 genocide, which left a dominant female population of an estimated 51%.
Laws have been set in place to provide more gender equality in the country. Women are allowed to own land and take more initiative in business and in politics. Rwanda has the highest number of women in parliament in the world and was the first country to have more than 50 female members of parliament.
And now there is a woman in the air.

Tag: Commercial

FORBES AFRICA SOCIAL MEDIA

Hoping For More To Bank On

Ambition Is Not A Dirty Word

Love At First Flight