By John Oyuke
Trade Bank was one of the most brilliant ideas in the local banking industry in the 1980s.
It was innovative, adventurous and well as ahead of its time.
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A brainchild of businessman Alnoor Kassam and his brother Iqbal Kassam, the financial institution had fashioned itself to attract small depositors and offered simplified account opening procedures long before micro finance banking became known to most Kenyans.
True to its slogan, Hakuna Maneno (meaning no hassles), at Trade Bank, one only required an ID card and a passport size photo to open an account, unlike in other banks, where one was required to produce letters of introduction, payslips among other documents.
At Trade Bank Centre, currently Integrity Centre, the Bank operated a drive in banking services where account holders would access services while waiting in their cars.
However, the bank, which had expanded rapidly to become the ninth largest bank in Kenya, did not escape the curse of insider trading, which had become a key pest of the industry and was placed under liquidation in 1993 by Central Bank of Kenya.
The bank, like several other locally owned financial institutions, extended a large share of its loans to companies associated with its shareholders, one of whom was a former minister and had also invested heavily in real estate development.
Commencing business in 1985, Trade Bank Group had five operating branches in Valley Road, Westlands, City Centre, Industrial Area and Mombasa. The Bank also had Agencies in Jomo Kenyatta International Airport (JKIA), Moi International Airport, Mombasa and Diani on the North Coast.
Speaking in early 1993, the then Finance Minister Musalia Mudavadi said despite the profitability indicated in the bank’s audited accounts, the group continued to experience liquidity problems.
This, he said, was due to a variety of reasons, including a run on deposits, investment in fixed assets and other non-bank activities.
In January 1992, he told Parliament that Central Bank assisted the bank to recover substantial debts from major debtors.
The recovery measures included the acquisition of the Yaya Complex in the settlement of debts.
The property was used to secure financial accommodation from the Deposit Protection Fund - a deposit insurance scheme for depositors and a liquidator of failed member institutions - in accordance with the provisions of the Banking Act.
"This action stabilised the operations of the Bank," Mudavadi told MPs in a ministerial statement.
In September 1992, CBK appointed a firm of external auditors to undertake a detailed investigative audit to establish the financial position of the bank group.
The Audit Report exposed weaknesses, which included liquidity constraints, poor asset quality, weak internal controls and violations in the Banking Act among others.
The bank was asked to submit comprehensive restructuring plans acceptable to the Central Bank.
Despite submission of the plans on March 12, 1993, various management irregularities persisted.
CBK appointed a manager soon after this to assume the management of the affairs of the bank.
This was to protect the interests of depositors and creditors and to restore public confidence in the management of the institution.
The manager was to dispose of the fixed assets to generate liquidity and collect outstanding debts from customers, including foreign exchange received from exports.
It is estimated that as at April 15th, 1993, when it was being placed under receivership, the bank had deposits from a number of individuals and institutions including Sh200 million of National Social and Security Fund (NSSF) and billions others of CBK.