Police Chief, Joseph Boinnet has ordered the arrest of eight bankers for behaving dishonestly.
The Inspector General of Police in a statement on Friday, listed six bankers from the National Bank of Kenya and two from Chase Bank – the bank that recently went into receivership on Thursday.
The Police Chief, Joseph Boinnet added that police have taken a man into custody for “peddling lies” on social media about the banking sector.
The Central Bank of Kenya (CBK) stated yesterday that massive withdrawals on Wednesday due to panic was caused by “inaccurate” rumours on social media, and blamed Chase Bank’s apparent turmoil on the falsehoods .
CBK Governor Patrick Njoroge revealed that the rumours spread on social media played a significant role in the bank’s problems, as flood of customers stormed the bank’s branches on Wednesday to withdraw their cash, and Chase could not deal with the withdrawals.
While reassuring that the banking sector is stable, CBK speaking through its Governor, Patrick Njoroge promised to crack down on rogue bankers.
According to him:
“We cannot tolerate rogue bankers, those who in effect steal from depositors,” Reuters news agency quotes Patrick Njoroge as saying.
On Wednesday, Chase sacked its Chairman and Group Managing Director after the release of two conflicting financial statements.
One of the statements had downplayed the bank’s internal loans. An audit later showed the bank had loaned its directors $80m, and its bad debts had increased steeply to $100m.
On 29 March 2016, National Bank placed its chief executive officer and five top managers on leave to set the scene for internal audit.
Read The Copy Of Police Chief’s Statement, Listing The Names Of The Bankers:
Chase Bank was put into receivership for 12 months since “it was not able to meet its financial obligations,” according to Central Bank of Kenya.
This means that all 62 of Chase’s branches would be shut down until new management is put in place. CBK noted that the bank is at the time experiencing severe liquidity and capital deficiencies, which raised concerns that it was not likely to meet its financial obligation and might close, prompting tensions among customers.
Paul Njaga, the Chief Executive and Deputy Group MD, said their problem began last year due to their financial performance – the bank sank into a Sh742.80 million net loss from a profit of Sh2.31 billion in 2014.
Therefore, KDIC will assume management control and conduct of the affairs and business of the institution licensed in 1996 but will follow appropriate strategy to resolve the issue within one year.