Chase Bank chairman Mr Zafrullah Khan and group managing director Mr Duncan Kabui have stepped aside following concerns over the credibility of the bank’s financials.
“Following the publication of the 2015 financial statements Mr Zafrullah Khan and Mr Duncan Kabui have stepped aside from the positions of chairman and Group Managing Director respectively,” said the bank in a statement to the media.
Chase Bank yesterday restated its financial results showing it had under-reported insider loans by a whopping Sh8 billion.
The restated financial results published yesterday showed that insider loans — money advanced to directors, shareholders, associates and employees of a bank — stood at Sh13.62 billion last year against the Sh5.72 billion it reported on March 31.
"The above statements and disclosures are extracts of the bank's financials as audited by Deloitte and Touche and received a qualified opinion," the bank said in the footnotes of its financials, meaning the information provided to auditors was limited in scope.
A qualified opinion is an auditing term meaning that there were information gaps in the lender’s financial statements, suggesting that the external auditor cannot vouch for the results.
The central bank Wednesday blamed mounting banking sector woes on weak lending policies and management failure.
The CBK told reporters that the high non-performing loans in the sector could have been as a result of weak lending policies laced with management failures and interests.
The regulator Wednesday said it will implement stringent checks even IT audits after National Bank managers were sent home following an audit by the board.
The Governor Dr Patrick Njoroge however said he wont comment on individual banks when asked about social media rumours over the health of Chase Bank.
"We are going for stringent auditing of banks' books including IT audits," the governor said.
Dr Njoroge also said that 80 per cent of the country's liquidity is held by the top seven bank.