National Bank Board of Directors allays fears of collapse

The board of directors of the National Bank of Kenya has sternly warned the media against being used by persons disgruntled by the ongoing restructuring process to publish unsubstantiated claims against the bank.

While providing a detailed update on the bank’s transformation, showing a sound and solid bank that was growing faster than expected and whose profits have been rising 45% CAGR, the board of directors led by Chairman Mohammed A. Hassan and Mr. Francis Atwoli- Chair of the Human Resource Board Committee- said they had not expected the ongoing transformation journey of National Bank to be entirely without resistance.

“We did not expect that all persons would welcome this transformation. It was not going to be a walk in the park. But here are the surprising facts: We have put-in massive investments in reducing the costs from around 80% in 2012 to 65% last year. We have done rebranding, voluntary early retirement (VER) program to optimize employee output, and the news is that after all this, the bank has continued to be profitably achieving the highest returns and growth year on year in the last 2 years.

In 2013, we reported 1.8 Billion in profits.  In 2014 the bank returned Ksh2.43 Billion, a whopping 45% CAGR in Operating Profits.  Our Balance sheet has been growing at 37% CAGR and has more than doubled in the two years: from Ksh 67B by end of 2012 to Ksh123 billion in 2014,” said Mr. Mohammed Hassan, a respected investment expert.

Mr. Francis Atwoli offered that if the bank had been at any kind of risk or trouble, the Central Bank of Kenya, the Capital Markets Authority and the board of directors in which the government and Kenyan workers were represented, would be the first to warn about it. The institutions respectively regulate, supervise and oversee operations at National Bank.

“When restructuring a business, there is a lot of politics involved, but we will not be distracted from our work. That is why we call for deeper research from your members of the media while reporting on the National Bank. This is our bank as Kenyans and we ought to be on the frontline protecting it, especially because it is now delivering the transformation we all yearned for,” he said.

The Kenyan Banking Industry is one of the most closely regulated, thanks to strict guidelines by the Central Bank of Kenya.

National Bank is itself in the remit of multiple regulators who exercise active supervision of the financial services sector including: the Capital Markets Authority (CMA Act), Central Bank of Kenya (Central Bank Act, Banking Act, Companies Act, RBA Act, Insurance Act, Labour laws, POCAMLA and Anti Terrorsit Financing Act), among many other laws. It is also under such other regulations that include the Nairobi Securities Regulations, the CBK Prudential Regulations, and Risk Management Guidelines.  The bank is also externally audited, in addition to the oversight by the board of directors.

Ms Beatrice Gathirwa, who represented Treasury in a press conference, took issue with the claim that Treasury had allegedly put National Bank under investigation. “Nothing could be further from the truth,” she said. “The letter from the PS Treasury did not talk about National Bank being put or imply it was likely to be put under any investigation. It was a letter communicating the cabinet decision requesting that some work to be done toward making a decision on privatization,” she said.

National Bank’s Managing Director and CEO Mr. Munir Sheikh Ahmed showcased to the media all directors who were serving bank in the management board, further debunking the claim that 10 directors had left the institution over the last 6 months. “This is the most inaccurate and malicious claim we have and you have our financial report from 2014 to verify that all these directors you have seen here were with us last year and have been with us for over one year. Only one director resigned on personal grounds.”

Mr Munir said that the banking industry continued to be very sensitive and the negative unverified stories could harm a good institution.  “It has cost the bank a lot of time debunking these falsehoods to its shareholders and customers.”   He said that even with the delayed Ksh13 Billion Rights issue, National Bank’s 50 projects earmarked to transform to be among top 5 most profitable tier 1 banks were ongoing but that when approved, the rights issue would go a long way to increase the pace of growth and profitability of National Bank.