Companies

Stanbic hit by Sh275m default from sister firms

stanbic

A Stanbic bank branch in Mombasa. PHOTO | NMG

Stanbic Holdings #ticker:SBIC has been unable to collect a total of Sh275.2 million worth of deposits in foreign banks which it is related to through their parent company Standard Bank Group of South Africa.

Banks open and maintain accounts in foreign institutions to facilitate various transactions including foreign exchange trades, cash transfers and investments.

“In the normal course of business, nostro and vostro accounts are operated and placings of both foreign and local currencies are made with the parent company and other group companies at interest rates in line with the market,” the Nairobi Securities Exchange-listed firm says in its latest annual report.

“For the year ended December 31, 2019, the group has made provision for doubtful debts relating to long outstanding amounts owed by related parties [of] Sh275.2 million.”

Stanbic did not specify the foreign entities that have not paid the amounts owed. The lender, however, does business with Standard Bank and more than 12 foreign lenders and other financial institutions owned by the Johannesburg-based multinational.

They include Standard Bank Jersey Limited, Stanbic Bank Tanzania Limited and Standard Bank Malawi.

Default by the related parties add to the list of international deals that have generated losses for Stanbic. The banking group also disclosed that it paid Sh1.5 billion to an unnamed corporate customer that had taken out a contract protecting itself against default by its partner in international trade.

Known as advance payment guarantee in commercial parlance, the contract triggers a claim whenever the cash recipient is unable to deliver the required goods or services to the buyer.