Branches of Charterhouse Bank remain closed today to customers despite a vague order given by an Eldoret Court was followed by jubilant employees of the Bank (dancing on TV) promising that it was only a matter of time before the bank resumed operations.
CBK's argument that money laundering was the reason for placing Charterhouse under statutory management was never strong and whether any laws were broken remains in doubt. Charterhouse was not a bank in danger of collapse and has fought the order from day one. The bank had 3.1 billion shillings in deposits, loans of 2.7b and even reported a 76 million profit in the half year to June before it got embroiled in the Nakumatt tax evasion furore.
Money laundering is closely linked to tax evasion and KRA has been pressing banks to scrutinise customer transactions for suspicious activity while international authorities have also been urging banks to monitor for terrorist related funding/transactions.
Smaller banks seem to be the preferred choice for many business people as they allow greater flexibility and accommodations including late deposits, high interest rates on deposits, and unauthorized temporary overdrafts.
5 comments:
Smaller banks in many countries face similar problems i.e. the costs (hassles & money) of "monitoring" customers' accounts makes them uncompetitive.
Generally small banks will work to assist "good" customers when needed including providing overdrafts rather than "bouncing" cheques!
Some customers may take advantage of this "help" & fleece the bank.
This is a tough situation... any suggestions since you were a banker?
I obviously don't know specific details but what I could tell from the publicly available info is that some business people had in effect created a parallel economy or were at least trying to.
Having the directors(owners?) of nakumatt, kingsway et al sit on the board of charterhouse at the same time providing the bulk of business for the bank seemed a bit too cosy. Unless charterhouse was setup to specifically serve those businesses.
Shows there's a brand of foreign investment that will put in as little as possible and take out as much as possible without any regard for their hosts. I am not sure that's the investors we want in our country.
Mwenya Nchi - What public info?
There may be shenanigans BUT its mostly the politicians braying!
If Nakumatt/Charterhouse did scam us, bring them to book lakini why do we never have the resolve to go after the blatant thieves who "stole" Karura?
When kituyi used PUBLIC funds to support a PRIVATE business (Uchumi was rundown by idiots not coz of Nakumatt!) Nakumatt protested thus the "actions" to try & shut them out.
Growth can be achieved in many ways. One of them is diversification.
Many of the most successful conglomerates try to do many things in-house.
General Electric has Engineering & Finance as key businesses. They also own a real-estate brokerage.
They sell a house, help finance the purchase, also provide discounted appliances! Biashara!
GE is one of the world's largest aircraft engine manufacturers. They also finance the same yaani a PACKAGE DEAL!
Walmart plans to BUY a bank to cut processing costs. If allowed it would also become a major purveyor of financial services.
Stop thinking small. Think COMPETITION. Provide a BETTER service or product!
coldtusker: Monitoring is not the primary concern of banks unless they have loaned the customer money. Smaller banks can give better faster service than large banks, but as a result sometimes get burnt by big (bad) customers
Mwenye Nchi: Nakumatt did things differently but they teh inter-relationships you describe are actually quite common in Kenya wher several conglomerates have intersts in banking, industries, manufactuing etc and often the same directotrs. For some it works, but the risks are also magnified
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