An Imperial Bank branch in Upper Hill, Nairobi. PHOTO | FILE
The Kenya Deposit Insurance Corporation (KDIC) has replaced Peter Gatere as the receiver manager of Imperial Bank.
Mohamud Mohamud, the head of risk and resolutions at KDIC, took over from Mr Gatere, who had been recalled from Eldoret to take the position.
Mr Gatere, who once served as the assistant director of CBK’s bank supervision department, is back at KDIC but it was not possible to establish his new role.
KDIC chief executive Aggrey Bett and the Central Bank of Kenya did not respond to queries on the matter despite acknowledging receipt of the mails.
Mr Gatere told the Business Daily that he was not the right person to talk about Imperial Bank matters before quickly disconnecting the call from his office line.
The Central Bank of Kenya (CBK) is in the process of strengthening its supervisory department having recently advertised 10 positions, including seven analysts who will conduct on-site financial examination of banks and three auditors of IT systems.
The department’s competency and integrity came under the spotlight following the sudden collapse of Imperial Bank last year in the wake of a massive fraud perpetrated for over a decade.
The CBK has expressed its intention to strengthen its capability to interrogate information systems of its licensees as most of the banking fraud is now happening through IT.
Patrick Njoroge, the CBK governor, said an internal audit was ongoing to identify any culprits at the CBK who may have abetted the fraud at Imperial Bank.
The regulator has sought technical support from the International Monetary Fund (IMF) and received funding from the World Bank to hire a consultant who will advise it on improvement of banking supervision within six months.
“We see next year as the year of transition when we shall more aggressively supervise banks,” Dr Njoroge at the end of last year.
Gerald Nyaoma was last year reassigned to head the supervision department following the demise of Fredrick Pere.
Sources within the CBK indicate that four employees have left the supervision department since Mr Nyaoma’s appointment, triggering a restructuring process.
The department is said to suffer from high staff turnover and inability to recruit experienced experts with insider knowledge.
In 2012, Kenyan banks were accused of cooking books to boost their profitability by underproviding for bad loans and failing to observe international accounting standards (IAS) in reporting their government securities portfolio.
But the then CBK governor Njuguna Ndung’u defended the integrity of the financial reports even as he changed the financial reporting format to enable it to monitor each class of government securities.
The IMF has previously raised concern over the adequacy of provisions for bad loans and the tightening of the supervisory regime is expected to result in an increase in bad loans provisions.
Dr Njoroge suspended registration of new banks to buy time for the regulator to bolster its supervision department and match the industry needs.
The governor has also sent out a memo to external auditors of commercial banks asking them to conduct extensive checks on the lenders during their next on-site audits.
CBK is hoping to ride on the auditors’ capabilities to complement its supervisory department before it concludes the hiring and training process.
The auditors will be required to interrogate the data provided to them by the banks especially on loans.
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