Private sector urges speedy merger of State-owned banks

Kenya Private Sector Alliance Chief Executive Carole Kariuki. 

Kenya Private Sector Alliance Chief Executive Carole Kariuki. 

The private sector has urged the Government to fast-track plans to consolidate State-owned banks into a single entity.

Under the aegis of the Kenya Private Sector Alliance (Kepsa), the sector players said they would continue to engage the Government with a view to prioritising the issue ahead of the August polls.

This comes as credit from private lenders to the private sector continues to dry up.

The banks lined up for consolidation are National Bank of Kenya (NBK), Consolidated Bank of Kenya and Development Bank of Kenya. The lenders will be merged to form one entity to be known as Biashara Bank.

Kepsa Chief Executive Officer Carole Kariuki said in a statement when the lobby met President Uhuru Kenyatta during the sixth Presidential Roundtable in May last year, it presented a model on how the new bank could be developed to provide financing, especially to Small and Medium Enterprises (SMEs) that have been starved off credit from private lenders.


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“Access to finance has been a key impediment to SMEs. Kepsa proposed the creation of a Biashara Bank as a means of facilitating and enhancing access to affordable credit for Small and Medium Sized Enterprises. From these discussions at the Presidential Roundtable, Kepsa was pleased to note that in November 2016 last year, Treasury Cabinet Secretary, Henry Rotich endorsed this idea with a proposal for a Biashara Bank,” said Ms Kariuki said.

Additional capital

Last year, Mr Rotich announced that Treasury had procured the services of London consultancy firm Genesis Analytics to advise the Government on how the consolidation would take place.

“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,” said Mr Rotich at the time.

He also emphasised that a big well capitalised State-owned bank would enhance the ability of local banks to participate in the financing of big ticket Vision 2030 projects.

The merger aims at giving policy leadership that will lead to increased size, scale and efficiency to the one institution formed. With the three banks currently in breach of at least one statutory ratio and National Treasury non-committal on when the merger will happen, they have been forced to look for additional capital to strengthen their positions in the market.

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