National Bank of Kenya (NBK) now risks losing crucial depositors after a parliamentary watchdog committee threatened to recommend that all Government agencies close their accounts at the institution.
The bank, which is in the process of a takeover bid by KCB Bank, has attracted the wrath of the Public Investment Committee (PIC) for declining to be audited by the Office of the Auditor-General despite the Government holding a 22.5 per cent shareholding in the lender.
Withdrawal of the accounts of the public entities would leave the bank struggling as it would mean that institutions such as the National Social Security Fund (NSSF), which currently holds 48 per cent of the shareholding, would be denying the lender substantial liquidity.
NBK has denied the Auditor General access to its books since 2013, arguing that its operations are guided by the Banking Act and not the Public Audit Act. Under the former, they can only be audited by a private statutory auditor, Chief Executive Wilfred Musau argued. Mr Musau and the bank’s management were hard-pressed by the committee to explain why they would consider themselves different from other banks where the Government has shareholding, and which are audited by the Auditor-General.
“The Central Bank, Consolidated Bank, Post Bank and Development Bank are all audited by the Auditor General. Can it be that these banks, including CBK which is your regulator, are all wrong and you are the only one who is right?” posed PIC Chairman Abdullswamad Nassir.
The MPs also dismissed claims by Musau that the fact that NBK was a listed company at the Nairobi Securities Exchange made them different from the other banks.
Mr Nassir pointed out that other listed companies where Government has some shareholding, including Kenya Power and KenGen, are also audited by the Auditor General.
NBK had initially told the committee that as per the recommendations of a presidential taskforce on parastatal reforms, it was not categorised as a State corporation since the Government did not hold a majority shareholding.
Backed by the Company Secretary Habil Aswani, Musau argued that NBK was a limited liability company whose operations are run by a board, a bank regulated under the Banking Act, and a listed company regulated under the Capital Markets Act.
Do not miss out on the latest news. Join the Standard Digital Telegram channel HERE.