List Of Kenyan Banks That Collapsed, Deposits They Had

• Research shows that many financial institutions collapsed in Kenya due to non-performing loans and liquidity challenges
• Spire Bank's woes began when the late Kenyan billionaire Nashaud Merali withdrew KSh 1.7 billion from the lender
• Ari and Reliance banks had loans valued at KSh 451.5 million and KSh 1.5 billion when they were liquidated

TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business, and technology reporting and offers profound insights into Kenyan and global economic trends.

A report titled Commercial Banking Crises in Kenya: Causes and Remedies shows that many financial institutions collapsed in Kenya due to non-performing loans.

Why banks collapse in Kenya

Research by the United States International University (USIU) and York University (Canada) revealed that a lack of aggressive debt collection policies contributed heavily to the problem of non-performing debt.

"Kenya has experienced banking problems since 1986, culminating in major bank failures.

"Non-performing loans are mainly caused by an inevitable number of wrong economic decisions by individuals," it stated.

Which banks collapsed in Kenya?

1. Spire Bank

Spire Bank's woes began when the late Kenyan billionaire Nashaud Merali withdrew KSh 1.7 billion from the lender.

This came after the Sameer Africa founder sold the financial institution to Mwalimu National Sacco.

The withdrawal in 2016 was equivalent to a fifth of the lender's KSh 8.54 billion deposits and triggered other customers to withdraw their cash.

According to Business Daily, the bank's lending weakened after the withdrawals, which meant a vote of no confidence.

Three years after Merali transferred his money, the bank lost KSh 2.2 billion, with over 80% of the funds removed in one year.

In January 2023, the Central Bank of Kenya (CBK) announced that Equity Bank Kenya Limited had acquired certain assets and liabilities of Spire Bank Limited.

2. Ari and Reliance Banks

When they were liquidated, The East African reported Ari and Reliance banks had loans valued at $3.5 million (KSh 451.5 million) and $11.58 million (KSh 1.5 billion), respectively.

The Kenya Deposit Insurance Corporation (KDIC) wound up the two collapsed lenders.

Winding up is the process of terminating a company by liquidating stock, paying creditors, and distributing residual shareholder assets.

Ari Bank Corporation Limited had been under liquidation since December 5, 1997, with KSh 287,000 in total deposits.

On the other hand, Reliance Bank Limited was put into liquidation in September 2000 with a total of KSh 969,000 in deposits.

3. Imperial Bank

The Central Bank of Kenya announced on December 9, 2021, that it had approved the liquidation of Imperial Bank Limited In Receivership (IBLIR) to pave the way for the sale of its remaining assets to settle any existing debts to depositors and creditors.

Imperial Bank Limited was placed under receivership by CBK on October 13, 2015, because of irregularities and malpractices in the bank, which exposed depositors, creditors, and the banking sector to financial risk.

At the time of receivership, IBLIR had 32 branches, KSh 70.3 billion (as of June 30, 2015) worth of assets, and KSh 58.1 billion worth of deposits owed to 50,000 depositors.

4. Chase Bank Limited

Chase Bank Limited was a medium-sized bank in Kenya with over 170,000 customers, 62 branches, and over KSh 100 billion.

As of 2015, the company had reported an 8-year CAGR in its Profit Before Tax of 52.8% to KSh 3.3 billion in 2014 from KSh 0.1 billion in 2006.

In April 2016, the CBK placed the bank under receivership after facing liquidity challenges. It was acquired by SBM Bank.

5. Charterhouse Bank Limited

According to a report by the investment company, Charterhouse Bank had been under statutory management since June 13, 2006.

The bank had gotten into trouble over severe violations of the Banking Act relating to lending, the accuracy of returns submitted to the Central Bank, and failure to get account opening documentation for several customers.

CBK announced the bank's liquidation on 7th May 2021 and named the Kenya Deposit Insurance Corporation (KDIC) the liquidator.

Charterhouse Bank had assets totalling KSh 4 billion and deposits totalling KSh 2.9 billion as of 2006.

Which family businesses collapsed?

In other news, the once giant retailer Tuskys lost its tusks two decades after the death of founder Joram Kamau.

Nakumatt, on the other hand, was liquidated in January 2020 after experiencing financial woes attributed to huge debts and mismanagement.

A decade after his death, Njenga Karume's empire is in ruins, with his children and trustees fighting to control his estate.

Proofreading by Mercy Nyambura Guthua, journalist and copy editor at TUKO.co.ke