12 February 2018

Kenya: Central Bank Locks Failed Banks' Bosses Out of New Jobs

The Central Bank of Kenya (CBK) has tightened the noose around former senior executives of failed banks, making it hard for them to take up managerial positions in other banks.

The move has left about 10 former Chase Bank executives and at least one Dubai Bank manager in a professional quandary, having been denied clearance by the regulator.

Some of the former Chase Bank staff had sought employment at Sidian and Gulf African banks.

The CBK's action is in line with prudential guidelines that require every bank to seek clearance from the regulator upon retaining services of any person at a senior level.

Gulf African Bank on Sunday confirmed that two of its senior staff who worked at Chase Bank have not received CBK clearance.

"They are yet to get the clearance, and meanwhile we have not granted them any approval power," Mr Abdalla Abdulkhalik, the CEO, told the Business Daily on phone.

Mr Abdulkhalik said one of the employees, who was hired in a senior management position, was yet to receive any clearance and could therefore not exercise any power of approval, adding that she was on her way out.

Another employee, who was hired to head another department, is also yet to receive his clearance, more than a year on the job.

Mr Abdulkhalik said the Islamic bank had received correspondence from the CBK raising issues on the employee's suitability, which have since been clarified and is awaiting response from the CBK.

The CBK did not respond to our queries but instead asked that the questions be directed to the commercial banks involved "as they would be the applicants in this process."

"This is not information we are not at liberty to disclose," said CBK in the statement.

Speedy exits

At the Sidian Bank, three former Chase Bank employees who were hired in various positions have since left the bank, but the lender declined to disclose reasons for their speedy exit.

The bank said in response to questions on the subject that 'all Sidian Bank Executive Team members who applied for a Fit and Proper Approval from CBK, had been cleared'.

Sidian Bank marketing and communication manager, Grace Mukami, declined to indicate whether those who left the firm had received the approval or not, insisting that the bank could not discuss its former employees with third parties.

Chase Bank was placed under receivership in April 2016 following a run on deposits in the wake of reports that it was facing liquidity problems.

Mauritian lender SBM Holdings has received the Central Bank of Kenya's (CBK) green light to take over Chase Bank and as part of the deal. SBM is expected to acquire the lender's carved out assets and liabilities.

The deal will also see the Mauritius-based lender absorb Chase Bank's staff estimated at 1,300 and about 62 branches.

The CBK prudential Guidelines set out the criteria for determining professional and moral suitability of persons in control of financial institutions.

The regulations requires all financial institutions to submit a 'Fit and Proper' filled by all new employees joining the firm at the management level to the CBK for assessment and approval.

Sanctions

The prudential guidelines bar senior officials from taking up their positions prior to being cleared by the Central Bank.

Breach of the provisions is liable 'to corrective measures and administrative sanctions as per the prudential guidelines'.

Under the Banking Act, the CBK has powers to verify the accuracy of the information on the fit and proper forms.

The guidelines state that "when an officer is assessed and found to be unfit and not proper to work for an institution, the affected institution shall be required to dispense with the services of such an officer forthwith and to inform the Central Bank of Kenya of such a decision."

For instance the form has a section requiring the applicant to disclose if he or she has been subject of investigations by government or professional body within and outside Kenya.

Further, the applicant is required to disclose if he or she has been dismissed from office, asked to resign from a job or has been disciplined by a previous employer due to honesty and integrity issues.

The applicant is further required to disclose if any organisation that he or she was serving in management or associated with has been wound up or ceased business.

Kenya

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