CBK suspends licensing of new commercial banks

The Central Bank of Kenya has suspended the licensing of new commercial banks, two sources within the bank said on Tuesday.

The sources said the central bank would however continue giving approvals for amalgamations, mergers and acquisitions among existing commercial banks.

This comes one month after CBK put Imperial Bank under receivership following malpractices at the mid-sized lender, but expressed optimism that the bank was still viable.

However, last week the Central Bank of Kenya said it was concerned that the shareholders of the privately owned bank were not acting quickly enough to come up with a proposal to revive the lender.

“The proposal includes an injection of new capital by shareholders, the conversion of a percentage of large deposits to equity, and recovery and collateralization of fraudulent loans,” the CBK said in a statement on Friday.

“The CBK notes with concern the delay by shareholders to provide adequate assurances for the implementation of this proposal, and urges a quick resolution of this matter.”

Imperial Bank was the second Kenyan bank taken over since August, when Dubai Bank Kenya Ltd was put in receivership after liquidity problems.

The central bank said this week it was considering harsher penalties for commercial banks that flout the rules and it may publicise enforcement actions that it takes against errant banks. (REUTERS)