KBA assures market of banking sector stability

The Kenya Bankers Association (KBA) has rubbished reports of instability in the country’s banking sector.

This follows of social media reports putting pressure on two banks that were purportedly headed for receivership.

The banking lobby group on Monday said the industry remains stable and robust and urged the public to stop spreading unfounded rumors about banks.

“Maintaining public trust remains paramount in ensuring stability is sustained. It is with this regard, that we urge the general public to refrain from perpetuating baseless claims about banking institutions,” KBA said in a statement.

KBA has at the same time urged banks to continuously keep customers updated on their affairs to eliminate the element of doubt that may cause concern.

“We urge KBA member banks to engage their customers and other key stakeholders in dispelling any concerns that are being spread through the social media,” KBA said in a statement.

Family Bank and Prime Bank have been in the eye of the storm over the last three weeks with word going round on social media that they could be shut down, causing panic withdrawals.

Chase Bank was affected by social media circulation in April of its operations that led to a bank run, forcing the Central Bank of Kenya (CBK) to place it under receivership.

The reassurance by the Kenya Bankers Association comes even as the banking regulator remains uncharacteristically quiet on the issue, a factor that has led many analysts to raise concern.

Family Bank said it remains financially sound despite panic withdrawals over the last one week.

Family Bank Chief Executive Officer David Thuku has said that there were several high withdrawals but things had stabilized with customers even opening new accounts.

“There was a little bit of unusual withdrawals in the first three days, but subsequently when customers realized it was a hoax, then they started returning their money,” Mr Thuku said adding the bank is now witnessing more deposits than withdrawals.

Mr Thuku said the bank plans to open seven branches by the end of the year as part of the bank’s growth strategy.

“In the next couple of weeks we’ll be opening three branches in Wangige, Eastleigh and a second branch on River Road,” he said.