Njoroge orders banks to disclose top shareholders on websites

What you need to know:

Banks must reveal on their websites and update periodically a share register of those who hold at least five per cent shares of the lender.
The directive is expected to lift the corporate veil on banks that have over the years kept their ownership closely guarded.

The banking sector regulator has ordered all lenders to disclose their top shareholders on their websites in fresh efforts to improve corporate governance in the industry.

A majority of Kenyan banks — which keep their shareholding secretly guarded — are now racing to beat the August 1 compliance deadline set by Central Bank of Kenya (CBK) governor Patrick Njoroge.

Dr Njoroge said Wednesday banks must reveal on their websites and update periodically a share register of those who hold at least five per cent shares of the lender.

The directive is expected to lift the corporate veil on banks that have over the years kept their ownership closely guarded.

The CBK also plans to introduce term limits for bank chief executives and non-executive directors, Dr Njoroge said, arguing that this measure is aimed at strengthening the governance of Kenyan banks.

“Greater transparency in ownership will ensure public confidence,” he said at a briefing in Nairobi.

Dr Njoroge added that unlimited directorship tenures “breed complacency”.

The transparency and governance rules come in the wake of the collapse of three lenders —Dubai, Imperial and Chase banks — precipitated by weak corporate governance practices that allowed for irregular issuance of loans to politically connected persons, wanton insider lending and running of parallel banks.