Consolidated Bank picks ex-KCB boss as chief executive

Consolidated Bank has appointed as CEO Thomas Kipkemei Kiyai, a former KCB executive, ending a protracted recruitment that saw the lender’s board reject a Treasury appointee to the post.

Mr Kiyai was until the appointment KCB’s director for financial planning.

The chief executive position of the State-owned bank had remained vacant since March 2014 when the board refused to recognise the Treasury secretary Henry Rotich’s appointment of Geoffrey Ndambuki as the new chief executive.

Consolidated Bank chairman Benson Ateng said at the time that Mr Ndambuki’s appointment was unprocedural since the bank’s board was not fully constituted to oversee the recruitment.

It is the bank’s board that negotiates employment terms with the chief executive, even though the Treasury Secretary is the appointing authority.

A court suit blocking the appointment was withdrawn in September last year, clearing the way for the board to initiate the hiring.

One of Mr Kiyai’s tasks will be to improve the bank’s thinning asset base, to give the lender room to grow its loan book.

“The bank’s strategic plans will also focus on developing its capital base, which will help to drive long-term growth, explore new market opportunities and enhance strategic flexibility to pursue local partnerships,” said a statement released by the bank.

A weak capital base saw Consolidated Bank report a half-year loss in 2014, in an industry where double-digit growth in profitability has become the norm.

Towards the end of 2014 the Treasury, the biggest shareholder with a 50.2 per cent stake, agreed to pump Sh500 million in additional capital, which was meant to also make the bank comply with industry regulations.

Consolidated Bank’s core capital stood at Sh840 million toward the end of the year, which was below the Sh1 billion statutory minimum set by the Central Bank of Kenya.

READ: Consolidated Bank set for Sh500m Treasury cash boost

Core capital to deposit ratio was at 6.7 per cent against a mandatory eight per cent, while the core capital to risk assets ratio was six per cent compared to statutory eight per cent.

Analysts said that the new banking laws will also require all lenders to increase their capital base, which should result in the Treasury and other shareholders pumping additional funds in Consolidated Bank.

“The new prudential guidelines under Basel ll require provisions for operational risk, thus the minimal capital required was revised upwards,” said Agnes Achieng’, a research analyst at Sterling Capital.

Mr Kiyai also said that the bank will also join the fray of lenders who are increasing the use of mobile and Internet platforms which are able to pool funds more efficiently and cut the cost of banking transactions.

“We are decisively strengthening and improving our competitiveness and targeting growth initiatives across our core businesses. Going forward we will focus on growing and defining more innovative solutions for our clients and grow our presence particularly in the growing Internet and mobile banking space,” he said in a statement.

Equity Bank, for example, says that its Mobile Virtual Network Operator (MVNO) licence would cut transaction costs by as much as 50 per cent.

Kenya’s largest bank by customer base estimated that transaction costs incurred through its mobile platform are Sh7, which is half the Sh14 incurred through agents, the cheapest transaction platform prior to the introduction of the MVNO system.