The state of the banking industry in Kenya is not rosy. Since the collapse of Chase Bank, Kenyans have been wondering if there is any bank left that is immune to collapse, and many experts including the Government have come out to assure Kenyans that the banking industry is not in shambles.
Advisers have tried stating that Equity Bank, KCB, Barclays, Standard Chartered Bank, and a few others are somehow immune and if in doubts of the small banks, one should secure their savings in these big banks. To help shed more light on the banking industry, Citizen TV hosted four bank CEOs from Equity Bank, Barclays Bank, KCB, and NIC Bank, a forum which Equity Bank CEO Dr. James Mwangi took advantage of to lie to Kenyans about their policy regarding Insider Loans.
During the show, the four bank CEOs agreed that the mismanagement of Chase Bank especially the issuing of unsecured insider loans was the cause of collapse of Chase Bank, with each agreeing that insider loans should be treated with care. Dr. James Mwangi stated that Equity Bank banned insider loans ten years ago.
Buyer Beware, the Facebook Group that warns buyers against fraudulent businesses, shared part of Equity Bank’s Financial Statement for the financial year ended 31st December 2015 to debunk Dr. James Mwangi and show that the fact is Equity Bank issues Insider Loans and did so one year ago check this link. Insider Loans and Advances given to Directors in the year 2015 were about sh1.73 billion and insider loans and advances given to employees were about 5.85 billion, which summed up to over sh7.5 billion. For the Equity Group (Consolidated), the Insider Loans and Advances summed up to over sh7.43 billion for the financial year ended 31st December 2014 and over sh8 billion for the financial year ended 31st December 2015.
Equity Bank is the biggest bank in Kenya by customer base, and majority of the bank’s customers are the low and middle income earners in the country. It is okay for Equity Bank CEO to do everything that he can do to assure Kenyans that Equity Bank is safe, that it has sealed almost every loophole Directors and Managers can use to bring the bank down, but it is very unethical to resort to blatant lies as an attempt to cement this assurance.