Kenya’s banking sector has experienced multiple waves of bank failures, each marked by unique challenges and outcomes. This article provides a comprehensive list of collapsed banks in Kenya, detailing the circumstances and timelines of their closures.
First Wave (1984–1989):
Before the enactment of the 1989 Banking Act, several family and community-owned banks collapsed due to inadequate regulatory frameworks and financial mismanagement. Notable institutions include:
- Union Bank
- Jimba Credit Corporation
- Estate Finance
- Estate Building Society
- Business Finance
- Nationwide Finance
- Kenya Savings and Mortgages
- Home Savings and Mortgages
- Citizen Building Society
Second Wave (1993–1995):
This period saw the collapse of 19 banks, many entangled in the Goldenberg scandal, which involved large-scale financial malpractice. Prominent among these were:
- Trade Bank
- Pan African Bank
- Postbank Credit
Third Wave (1998):
The late 1990s witnessed further bank failures, primarily due to non-performing loans and poor corporate governance. Key institutions affected included:
- Bullion Bank
- Fortune Finance
- Trust Bank
- City Finance Bank
- Reliance Bank
- Prudential Bank
2003:
- Euro Bank: Collapsed in February 2003, leading to a loss of approximately Ksh 1.4 billion deposited by various state organizations.
2006:
- Charterhouse Bank: Placed under statutory management in June 2006 due to severe violations of the Banking Act. In May 2021, the Central Bank of Kenya appointed the Kenya Deposit Insurance Corporation as liquidator.
2007–2015:
Under CBK Governor Prof. Njuguna Ndung’u, several banks faced challenges, though none were liquidated during this period. Institutions included:
- Kenya Finance Corporation
- Trade Bank
- Euro Bank
- Charterhouse Bank
2015–2023 (Under Governor Patrick Ngugi Njoroge):
This era experienced notable bank closures:
- Dubai Bank Kenya Limited
- Date of Closure: August 14, 2015
- Reason: Liquidity challenges and regulatory violations.
- Outcome: Liquidated by the Kenya Deposit Insurance Corporation.
- Imperial Bank Limited
- Date of Closure: October 13, 2015
- Reason: Unsafe banking practices.
- Outcome: Liquidation approved in December 2021 to compensate depositors.
- Chase Bank Limited
- Date of Closure: April 7, 2016
- Reason: Liquidity difficulties due to financial misreporting.
- Outcome: Assets transferred to SBM Bank Kenya Limited; remaining assets liquidated in April 2021.
- Charterhouse Bank Limited
- Date of Liquidation Appointment: May 2021
- Reason: Severe violations of the Banking Act led to its closure in 2006, but liquidation was formally initiated in 2021.
- Outcome: CBK appointed the Kenya Deposit Insurance Corporation (KDIC) to oversee the liquidation process to protect depositors and creditors.
Factors Contributing to Bank Collapses in Kenya:
- Non-Performing Loans: Inadequate debt collection policies leading to financial strain.
- Corporate Malpractices: Irregular lending, insider dealings, and fraud.
- Regulatory Challenges: Insufficient supervision and delayed interventions.
- Economic Conditions: Inflation and unfavorable macroeconomic factors.
Recommendations for a Stable Banking Sector:
- Enhanced Regulatory Oversight: Continuous monitoring to detect financial malpractices early.
- Improved Corporate Governance: Robust structures to prevent fraud.
- Public Awareness: Educating depositors on banking practices to build confidence.
- Risk Management: Adopting policies to mitigate exposure to risky lending.
Note: This information is accurate as of December 12, 2024. For the latest updates, consult the Central Bank of Kenya’s official communications.
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