Our loan Approval Processes are Beyond Board Says HF

Housing Finance Limited (HF) refutes claims that it ‘intentionally misreported its Non-Performing Loans (NPL s) position during Rights Issue in 2015.

HF Group chairman Steve Mainda in response to media reports states the information, “Is actuated by malice and intended to serve other collateral purposes.”

Mainda in a statement states that HF’s loan approval processes were beyond board. Upon review of the cases specifically mentioned, “The Board is satisfied that the required disclosures, both at the Board level and to Regulators were done in all the matters highlighted. For avoidance of doubt, all the lending mentioned was at arm’s length, fully secured and with a clear business case.”

“Moreover, the management lending committee of Company meets every two weeks to approve new credits and also to review the asset book and exit non-performing clients through recovery avenues open to the Lender,” he adds.

Read: What is the Truth behind Non-Performing Loans: Employees or Customers?

This is in response to Former HF Credit Manager Kevin Isika who has sued Frank Ireri, the company CEO for approving hundreds of millions of loans that amount to Sh. 4.3 billion irregularly to his in-laws and to Equity Bank chairman Peter Munga.

In December 2016, Ireri refuted allegations of the KSh4 billion in hidden Non-Performing Loans (NPLs), terming them ‘simple employment matter between employer/employee’.

Read: HF Group Refutes Allegations Over KSh4bn Hidden Bad Loans

During its rights issue, HF was seeking to raise Ksh 3.5billion by issuing 116,666,667 new ordinary shares at an Offer Price of Ksh 30.00 (28.9% discount) per share in the ratio of 1:2.

The proceeds were expected to increase its lending capacity and fund growth and expansion in line with the company’s growth strategy.

The issue received a 257 percent subscription level raising Ksh 9.01 billion against the target of Ksh 3.5 billion.

During the period, insurance group Britam acquired an extra 2.6 percent stake in HF raising its total shareholding to 48.63 percent. This was after buying out Equity Bank’s 24.73 percent stake at a cost of Ksh 2.78 billion raising its ownership to 46.04 percent from 21.4 percent.

The case was filed on 25th July 2016 whose suit is against HFC limited – Mortgage lender for alleged wrongful termination by the claimant Kevin Isika Mule.

Mainda, however, states that, “Due internal process was followed in terminating the employment of the said Claimant, in line with HF Group’s employment policies and this is well documented in our defence. The Claimant was dismissed on seven grounds of misconduct, which grounds are very well documented in the Show Cause Letter issued and served on him.”

Isika joined HFC in February 2014 from Standard Chartered where he had worked for 18 years.

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