Commercial banks move to calm industry collapse rumours

Commercial banks have dismissed rumours on social media about the impending collapse of several lenders over liquidity constraints. PHOTO: COURTESY

Commercial banks have dismissed rumours on social media about the impending collapse of several lenders over liquidity constraints.

In a statement under the auspices of the Kenya Bankers Association (KBA), the banks termed the reports untrue and sought to assure their clients and the public at large that the sector remains stable.

"In light of the rumours circulating on social media about the stability and liquidity of various Kenya Bankers Association (KBA) member banks, KBA advises the banking public not to engage in rumours or speculation that are unfounded," said the lobby.

"A probe by the Central Bank of Kenya's (CBK) Banking Fraud Investigation Unit (BFIU) is underway to determine the source of these speculations and to hold accountable those that are responsible for propagating such damaging claims."

Last week, reports flooded social media channels that several commercial banks are facing liquidity challenges and advised customers to withdraw their money.

One woman was arrested on Friday night for allegedly sharing messages alleging that Family Bank is facing financial distress.

The social media reports come following Parliamentary Accounts Committee chairman Nicholas Gumbo's revelations that 17 banks were involved in moving Sh1.6 billion embezzled from the National Youth Service (NYS).

Although KBA maintains the country's banking sector remains stable and robust, the bankers' lobby has remained silent on allegations that close to half of commercial banks in Kenya were involved in laundering the NYS loot.

Central Bank of Kenya boss Patrick Njoroge has since written to the directorate of criminal investigations to open criminal proceedings against top management of Family Bank that have been adversely mentioned in the ongoing investigations.

Early this year, Chase Bank was placed under receivership after the bank was unable to meet its financial obligations.

The governor blamed social media users for fuelling a bank run against Chase Bank that worsened its poor financial position.