Central bank seeks IT experts to monitor rogue bankers

The Central Bank of Kenya (CBK) is seeking tech-savvy professionals to watch over banking transactions amid rising confidence following the collapse of three banks.

Treasury secretary Henry Rotich said the banking regulator will hire Information Technology (IT) staff for CBK’s supervisory department. They will also be trained on forensic auditing.

This follows revelations that the supervisory unit lacks the expertise to audit banks’ IT systems — which rogue and greedy directors have exploited to lend themselves billions of shillings of depositors’ funds in breach of banking regulations.

“We are enhancing oversight of commercial banks’ IT systems while at the same time improving the skills of supervisory staff on IT and forensic audits,” said Mr Rotich.

“In addition, the CBK is in the process of recruiting skilled IT staff to strengthen its technical capacity.”

A weak CBK supervisory unit was blamed for failure to detect banking executives busy cooking financial books to present a rosy picture to shareholders and cover up insider lending.

The closure of three banks in a span eight months shook the confidence of depositors in the banking sector.

Chase Bank, Kenya’s 12th largest lender with deposits of nearly Sh100 billion, was put under receivership on April 6 and re-opened on May 4. Last August Dubai Bank, valued at Sh2.92 billion, collapsed followed closely in October by Imperial Bank which went down with Sh58 billion of depositors’ funds.

READ: CBK has no IT staff to monitor banks amid crisis

Analysts reckon that a supervisory unit backed by ICT experts would have detected the malpractices early and saved depositors’ funds.

Banks have in recent years spent billions of shillings in upgrading their IT networks, easing paper work in their transactions.

Imperial Bank was placed under receivership after it was discovered that senior management had manipulated its IT system to conceal malpractices including irregular lending of Sh29 billion of depositors cash.

Investigations also unearthed cases of money laundering and cheque knitting schemes at the bank.

Chase Bank collapsed early this month due to inability to meet its financial obligation over liquidity challenges.

Its executives chose to under-report insider lending by Sh8 billion thereby fooling regulators and financial markets on the bank’s health.

The troubled lender irregularly advanced various entities Sh16.6 billion, most of them associated with insiders, without proper security. This put billions of shillings belonging to its 55,000 depositors at risk.