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We take a look at some of the news affecting banks in the country after an unprecedented attack on some of the banking CEOs in the country on social media.

In the first of a three series story, we take a look at NCBA Bank and Cooperative Bank in what will be a look at how the leading bankers run these institutions of trust.

Much has been said about the lack of publicity in many banking institutions in the country, the alleged ‘pocketing’ of journalists to kill stories, scandals, fraud and shortcomings.

From a decision to win a tax exemption by NCBA Bank to the decision to allocate majority shares during the Cooperative Bank IPO, this article provides an eye-opener to many underhand dealings by the banks and the management.

NCBA Bank

Kenya’s founding Mzee Jomo Kenyatta family linked bank NCBA Group was accused of allegedly stealing Sh300,000 from an account held at the bank belonging to a lady named Tabitha.

In a post by prolific blogger Cyprian Nyakundi, a customer at the bank had written “7 weeks ago, over Sh300,000 was stolen from my @NCBABankKenyaaccount. The post drew haaundreds of tackles with a slew of accusations on the bank that enjoyed State patronage through its life.

“I’ve been chasing this up to no avail. Please help me retweet this to get their attention. More info on my IGTV. Will be sharing more on IG stories too”, Tabitha whose Twitter name is @CravingYellow) wrote.

In 2021, a NCBA customer was reportedly counting huge losses after the bank’s asset department sold his lorry after paying the bank Sh907, 000 before the lorry’s auction date, after a notice which was given by the bank.

A letter from the bank, Ref: 4521420097, dated January 22, 2021 previously requested the client, through Urban Digital Services, of repossession of his vehicle over the “inability to meet the monthly installments” as earlier indicated in a previous agreement.

Fred Omondi, after the NCBA notice, paid the bank Sh907, 000 on February 10, 2021 and disbursed the remaining amount, as demanded, to the bank, via MPESA. The bank, however, went ahead to sell Fred Omondi’s lorry KCY 274D, on February 22, 2021 after paying Sh907,000 on February 10, 2021 before the auction date.

In 2020, the financial institution was put on the spotlight after some of its customers wrote to the Central Bank of Kenya (CBK) seeking help over fictitious transactions running into millions of shillings and unlawful Credit Reference Bureau (CRB) listing.

Last year, prominent lawyer Philip Murgor accused NCBA of wrongly listing him as a defaulter after lack of due diligence in the Fuliza Loan led to a person using details belonging to the Senior Counsel in the application of a Sh1,300 loan facilty.

Murgor accused NCBA of failing to verify the information before erroneously listing him with credit reference bureaus as a loan defaulter.

NCBA listed Murgor with credit reference bureaus on May 7, 2021, after its records showed that a mobile phone number registered with the prominent lawyer’s identity card had defaulted on the Fuliza loan.

The phone number at the heart of the Sh1,300 loan dispute was, according to NCBA, registered using Murgor’s identification documents, but Murgor says the line is in another individual’s name.

During the suspicious merger of CBA Bank and NIC Bank, the entity is said to have benefited from a National Treasury tax exemption, benefitting from the patronage of retired President Uhuru Kenyatta.

Last year, many people across the country complained about the alleged exemption that saw the Kenyan taxpayer feel change on hundreds of millions of shilling.

NCBA managing director John Gachora has said that the lender is ready to pay Ksh350 million in taxes waived by the state during the merger between NIC Bank and CBA Bank in 2019.

The media-shy and closely guarded bank CEO has been at pains to put the record straight on the illegality that continues to cloud the otherwise professional operations of the entity.

The announcement comes at a time there has been unofficial tax demands from the government to former President Uhuru Kenyatta and his family.

Gachora said that the law was followed when the waiver was awarded. He said if the court ruled otherwise, the bank would draw a Sh350 million cheque to the Kenya Revenue Authority the following day.

“People need to understand that the waiver was given to NCBA or the merging parties with over 26,000 shareholders behind the banks that were merging,” he said.

At the time of the merger, the Kenyatta family held a significant stake in CBA, while NIC was owned by business mogul Philip Ndegwa. Politicians affiliated to Kenya Kwanza administration claim that President Kenyatta used his influence to get the waiver.

“What I assure Kenyans is that should the court find that NCBA was not entitled to the waiver, the day the court makes that decision, the following day we will send a cheque of Sh350 million. That I can assure you,” the MD said during an interview

The current court case was filed by Busia senator Okiyah Omtatah, who argued that the process for the waiver was opaque.

Cooperative Bank

Down at Cooperative Bank of Kenya corruption laden Gideon Muriuki led institution, at the heart of the country’s banking oligarchy has been fighting one accusation after another. From steamy sex scandals, the nepotism, to officially tribalisng the top echelons and mounting customer complaints, they stand in the eye of any storm that engulfs the banking industry that is dominated by one community in the Kenya kaleidoscope.

As a deal to buy into non-performing Jamii Bora Bank gained pace, analysts were worried about due diligence done by Cooperative Bank which had in the past been hit by cases of fraud perpetrated by bank employees who work in cahoots with external persons to obtain money from the bank.

The Gideon Muriuki led Bank was on the spot as having weaknesses in its IT systems, which was attributed to sources within the bank.

Co-operative Bank has reported erratic systems of poor quality and that explains for instance the constant system hitches.

 “The former bank chairman’s sons are said to have supplied IT systems to the bank. The same family have also been rumoured to be supplying and tendering with the bank,” says a former employee, sacked in 2017.

The downtime attributed to a technical fault left the bank’s ATM Services, Card transactions at Merchants and other Point of Sale outlets dysfunctional rendering transactions by its customers impossible.

The bank, then announced having moved almost 90 percent of its customer transactions to alternative delivery channels including mobile and ATMs, has 580 ATMs and over 11,000 Co-op kwa Jirani agents across the country and the number is set to increase with the opening of new ATM machines and branches in Northern and Eastern Kenya.

Malfunctioning systems have been reported on December 22, 2017 and the worst would be on July 22, 2014 when the systems failed leaving numerous customers stranded with all manner of complaints.

There are those who found huge sums of money missing from their bank accounts, others could not access their funds, those whose payroll is processed by the bank had to wait for over 4 days to access their salaries.

This also applied to those who had deposited cheques, which took more than four days to clear.

On the Jamii Bora Bank purchase, which is as good as done, financial analysts are wondering why a behemoth like Coop Bank with a big financial muscle can go for a bank that survive by ‘the Grace of God’.

Jamii Bora Bank had in the entire period of its existence remained stagnated, refusing to innovate and introduce any change in the banking industry.

The transaction required regulatory approval from the CBK, Capital Markets Authority and the Competition Authority of Kenya and in the tribal oligarchy and corruption perpetrated by Cooperative Bank management ensured that it was easy for CBK boss to give the nod at first sight of the application.

The Nairobi Securities Exchange-listed Co-op commenced operations in 1965 and had the fourth highest market share (9.63 percent) in the banking industry at the end of last year.

In contrast, Jamii Bora, started in 2010 after the acquisition by City Finance Bank, and had a market share of 0.12 percent, putting it at position 38 out of 39 banks.

The deal will lead to changes in market share as well as expansion of Cooperative bank branches.

Jamii Bora’s last published financials are for the first quarter of 2018 when it had assets worth Sh12.5 billion.

Its liquidity ratio was in negative 11.1 percent compared with CBK’s minimum of 20 percent as at end of March 2018, leaving it in liquidity deficiency of 31.1 percent.

Who Owns Cooperative bank of Kenya?

In the past, Coop Bank has been accused of pummeling smaller banks and stagnating their growth, a case that was recorded in the acquisition of Spire Bank from Industrialist Naurdshad Merali in 2017.

The bank, bought by Mwalimu Sacco threatened the real existence of Coop Bank as the third biggest in the country and an immediate threat that most teachers in the country could have opened accounts there was going to be a real effect on the customer base.

The country has more than 200,000 teachers and an immediate switch is music to the bank manager’s ear.

Many economists says there is no logical explanation behind these constant system challenges that when resolved leave many customers in tears?

What is the CEO who is also the MD doing other than fighting over land, laundering money and getting embroiled in love scandals only to emerge the highest paid when customers get wanting services?

The insider intimated that the bank’s internal investigations have established a link between employees who know about malfunction in some of the bank’s IT systems and account holders who take advantage of the system.

While some of the cases have ended up in the court and others remain under police investigation, the bank, keen to protect its image, has hardly reported the full extent of the problem to authorities and has on occasions refrained from pressing charges against account-holders implicated in the fraud.