NBK bosses taken to task over asset sale, staff layoffs

Parliament's Public Investment Committee (PIC) Thursday questioned investment decisions and firing of senior managers at the National Bank of Kenya (NBK), even as they insisted the bank is not up for sale and that its business strategy was sound.

Top of the list was selling of 12 branches and firing of 290 senior staff, among them managers, in the ongoing restructuring at the bank in which the Government has significant stake. Claims that the bank advanced millions of shillings to one of its directors also featured during the sitting.

NBK Chief Executive Officer Munir Ahmed was further tasked to provide details of the sale of the branches. He, however, did not provide actual figures on the assets sold but informed the committee the sale prices were above the market value.

He disclosed that the bank's Mombasa branch was sold to Steel Traders Ltd after he was pressed by Muthoni Njuki (MP Chuka-Igambang'ombe) to provide details.

In defence, the NBK boss denied claims of asset stripping. He said the sale of the 12 branches was to raise additional capital. "Any well-run bank does not invest in real estate since the venture does not earn optimum profit," explained the NBK boss.

MPs claimed the decision to sell the assets and the ongoing changes at the bank had been "choreographed to lower the standing of the bank so that some individuals can buy it at a throwaway price".

"As a former assistant minister of Finance, I am aware there are individuals who are interested in buying NBK," said Oburu Oginga (nominated). The bank boss said over 200 staff voluntarily retired, among them managers who opted for early retirement as they were close to the requisite age.

Doing well

Ahmed said the bank was doing well as opposed to reports, adding that the restructuring provided a better working environment for its growth. "We are rebuilding NBK... The bank was in a terminal decline," he said.

He told the committee that the bank recorded a profit before tax of Sh707 million in the first quarter ended March 31, 2015, an improvement from the Sh588 million posted in a similar period in 2014. The committee also questioned the reason behind Capital Market Authority not allowing the bank to launch a rights issue.

In reference to Kenya Airways, Mumias Sugar Company among other State corporations going through financial turbulence, PIC chairman Aden Keynan said the committee does not want to see NBK going down its knees. The Kenyan government has a 22.5 per cent stake in NBK, while NSSF's stake stands at 48.05 per cent.

Ahmed also took a swipe at the media over what he termed as 'malicious and ill-motivated reports' about the bank. "Banks are susceptible to reputation damage that can create a run even when the information is false as some of those you received," he said.