Patrick Njoroge (Bloomberg)
Kenya’s central bank will provide a facility to any bank or microfinance institution that faces liquidity problems through no fault of its own, starting on Monday, Governor Patrick Njoroge said on Sunday.
Fears over the health of Kenya’s banking sector have grown since the central bank put Chase Bank Kenya into receivership last week, the third lender to be taken over by the central bank in nine months.
Njoroge said the facility, for which he did not give the amount but said had no upper limit, would be available for as long as necessary to provide a sense of calm and reiterated that the financial sector was stable.
“From Monday, we will avail a facility to any bank or microfinance institution that comes under liquidity pressures for no fault of their own. We will avail this facility for as long as is necessary to return stability to the Kenyan financial sector,” Njoroge told a news conference.
“I am sure depositors, once they know, that this support can be provided to their institutions, they will be calm, and calm will be restored.”
The mid-sized Chase Bank was put into receivership after its gross non-performing loans rose sharply last year. Njoroge said the central bank was working to get Chase Bank open as soon as possible and that Chase had drawn the interest of both local and foreign investors, who he did not name.
“The way we are going about that is talking with shareholders. Also with interested parties, that is suitors, possible suitors. We hope there will a solution for Chase Bank as soon as possible,” he said.
“In terms of this specific institution Chase Bank, yes there is a lot of interest and we hope that that would lead to a quick conclusion.”
On Saturday, President Uhuru Kenyatta said he supported Njoroge’s actions to protect depositors’ money.
“We are really dealing with any fear, anxiety that is out there,” Njoroge said.
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