Crack in Armour: Cooperative Bank Flips

[Omollo]

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http://www.standardmedia.co.ke/article/2000213481/cooperative-bank-complies-with-new-banking-law

[Empedocles]

Barclays Bank joins the bandwagon:

[RV Pundit]

That is great news. Inflation & other macro-economic indicators have been under control, there is a working credit referencing, our justice system is getting better, the economy is booming - clearly banks can make money at those rates.

[Empedocles]

That is great news. Inflation & other macro-economic indicators have been under control, there is a working credit referencing, our justice system is getting better, the economy is booming - clearly banks can make money at those rates.

Err, that's really stretching it quite a bit, ain't it?

[Nefertiti]

Those are true indicators, Empedocles, CRB is working, a thriving private sector, the justice system is a work in progress especially corruption, access and pace.

[Empedocles]

Those are true indicators, Empedocles, CRB is working, a thriving private sector, the justice system is a work in progress especially corruption, access and pace.

Just to touch on one; corruption. What exactly is the progress? To be fair, I don't expect corruption to be eradicated all at one go but what are the concrete steps being taken by the government and judiciary to prosecute those involved?

You see, Waiguru is so comfortable knowing nothing is going to happen. Where from and why is she all that confident?

Almost 4 months down the line, Juma has been forgotten. Investigations have been shelved.

Same thing.

[Nefertiti]

Just to touch on one; corruption. What exactly is the progress? To be fair, I don't expect corruption to be eradicated all at one go but what are the concrete steps being taken by the government and judiciary to prosecute those involved?

You see, Waiguru is so comfortable knowing nothing is going to happen. Where from and why is she all that confident?

Almost 4 months down the line, Juma has been forgotten. Investigations have been shelved.

Same thing.

I see your point. The justice system is quite some way off considering the impunity of the top two and their cohorts. If there is one big letdown it is the DPP. Followed by the "dynamic" duo. If Uhuru had a leg TNA would ask Waiguru and any tainted names to get cleared first. There ought to be a certificate of integrity.

I wonder what impact this scenario of impunity and corruption has on banking. Principal victim is the government. Private business is spared and cases of theft and default are dealt with.

Of the other two: CRB seems to be up and running. I am uncertain the big guns are listable. Are you?

[Omollo]

It is the likes of Waiguru, Waititu, Kimunya, Kamau of Radissons, Etc who will spearhead the demonization of Raila among Kikuyus. They will tell them that he is out for revenge. That he wants to lock all Kikuyus inside Kamiti and kill those who try to escape.

The message as usual will be unified, consistent and perverse. It will be picked up by the Local Language radios and driven hard. It will focus on getting a high turnout.

So what motivation does Uhur have to undermine his re-election machinery? His is to oil it using the Eurobond.

[RV Pundit]

Jubilee have done a poor job in the fight against corruption.They've done very well in other areas save for this. Security which was also in a mess has been improved tremendously the last 1-2yrs.  That is a fact. I hope Uhuru can summon the courage to slay this dragon. He clearly doesn't need corrupt proceeds. The fight against graft I think is the next battle in Kenya.

[Kichwa]

Ouru may not need corrupt proceeds because he inherited old stolen money, but most people around him especially Ruto need stolen money.  Ouru is too weak to say NO to the greedy people around him and therefore corruption will continue under ouru unabated.

[Kim Jong-Un's Pajama Pants]

Ouru may not need corrupt proceeds because he inherited old stolen money, but most people around him especially Ruto need stolen money.  Ouru is too weak to say NO to the greedy people around him and therefore corruption will continue under ouru unabated.

I have never bought that line that kamwana does not need stolen money because he inherited loot.  The biggest thieves in Kenya generally don't need the money.

[Omollo]

Uhuru Kenyatta has broken all existing records as far as public theft goes:

1. He paid out 1.4 billion so that as he said Kenya could get the Eurobond
2. He then stole the entire amount (Ksh. 278,711,037,463 Billion)US$ 2.75 billion and stashed it abroad

Pundit and other Uhuru defenders want us to believe such an amount can come in to Kenya and there be nothing to show for it.

The SGR cost KES 327 billion ($3.8billion).

http://kptj.africog.org/eurobond-accountability-facts-figures-questions-by-david-ndii/

[RV Pundit]

This is ridicolous.Not a single cent of Eurobond was stolen and Gov should borrow more Eurobond to reign on banks who loan gov far more than Eurobond every year. Little knowledge is incredibly dangerous.

CFC join the fray and cut rate for existing loans.

In the meantime http://www.nation.co.ke/business/CFC-Stanbic-becomes-first-bank-to-cut-rates-for-existing-loans/996-3363944-1plrkpz/index.html

Uhuru Kenyatta has broken all existing records as far as public theft goes:

1. He paid out 1.4 billion so that as he said Kenya could get the Eurobond
2. He then stole the entire amount (Ksh. 278,711,037,463 Billion)US$ 2.75 billion and stashed it abroad

Pundit and other Uhuru defenders want us to believe such an amount can come in to Kenya and there be nothing to show for it.

The SGR cost KES 327 billion ($3.8billion).

http://kptj.africog.org/eurobond-accountability-facts-figures-questions-by-david-ndii/

[Kim Jong-Un's Pajama Pants]

Uhuru Kenyatta has broken all existing records as far as public theft goes:

1. He paid out 1.4 billion so that as he said Kenya could get the Eurobond
2. He then stole the entire amount (Ksh. 278,711,037,463 Billion)US$ 2.75 billion and stashed it abroad

Pundit and other Uhuru defenders want us to believe such an amount can come in to Kenya and there be nothing to show for it.

The SGR cost KES 327 billion ($3.8billion).

http://kptj.africog.org/eurobond-accountability-facts-figures-questions-by-david-ndii/

They have been able to account for some of that money.  A little over half.  I wouldn't go as far as to say they stole all of it.  Unfortunately, like many things in Kenya, once it goes partisan, who cares whether wanjiku was robbed or not?

[veritas]

The fine print is longer. Most Kenyans don't qualify anymore for a 14.5% loan, so they make a referral aka sell your private details to a third party subsidiary that isn't technically a bank. These sorts of economic policies are really a step backwards for Kenya.

http://documents.worldbank.org/curated/en/876751468149083943/Interest-rate-caps-around-the-world-still-popular-but-a-blunt-instrument

[Georgesoros]

Exactly Veritas.
In the end its a lose lose situation. Stringent measures for new loans thus slowing down making loans. Capping rates is a lazy legislators way of saying I did something.
On the better side, inflation will significantly come down.
Jobs will definitely be lost.

The fine print is longer. Most Kenyans don't qualify anymore for a 14.5% loan, so they make a referral aka sell your private details to a third party subsidiary that isn't technically a bank.

[Georgesoros]

Yes Pundit is always optimistic, especially with the justice dept.

That is great news. Inflation & other macro-economic indicators have been under control, there is a working credit referencing, our justice system is getting better, the economy is booming - clearly banks can make money at those rates.

Err, that's really stretching it quite a bit, ain't it?

[veritas]

Exactly Veritas.
In the end its a lose lose situation. Stringent measures for new loans thus slowing down making loans. Capping rates is a lazy legislators way of saying I did something.
On the better side, inflation will significantly come down.
Jobs will definitely be lost.

The fine print is longer. Most Kenyans don't qualify anymore for a 14.5% loan, so they make a referral aka sell your private details to a third party subsidiary that isn't technically a bank.

Yep. Another paper: https://assets.publishing.service.gov.uk/media/57a08a0de5274a31e00003d0/Interest_rate_caps_and_their_impact_on_financial_inclusion.pdf

[veritas]

Even though financial institutions can
remain profitable in the presence of interest rate caps, such restrictions may reduce investments in new
markets. In extreme cases where ceilings are set at unprofitable levels, banks and microfinance
institutions may withdraw from certain locales such as rural areas or from expensive market segments
because they cannot cover their costs.
1 In some cases, then, low-income borrowers with few options for
borrowing in the formal market could turn to unlicensed moneylenders, probably at a higher interest rate.
Finally, according to some evidence, interest rate caps on loans discourage microfinance
nongovernmental organizations (NGOs) and other sources of finance for the poor from converting into
licensed financial institutions (Helms and Reille 2004).

http://documents.worldbank.org/curated/en/876751468149083943/pdf/WPS7070.pdf

[veritas]

Price rises
There is some evidence from developed markets that the imposition of price caps could in fact increase
the level of interest rates.
In a study of payday loans in Colorado15, the imposition of a price ceiling was initially seen to reduce
interest rates but over the longer term rates were seen to steadily rise towards the interest rate cap. This
was explained by implicit collusion, by which the price cap set a focal point so that lenders knew that the
extent of price rises would be limited and hence collusive behaviour had a limited natural outcome.
3.2 Demand side
Elasticity of demand
Inherent in any argument for an upper limit on interest rates is an assumption that demand for credit is
price inelastic. If the inverse were true, and that market demand was highly sensitive to small rises in
lending rates then there would be minimal reason for government or regulators to intervene.
11 De Mel, Suresh, McKenzie, David John and Woodruff, Christopher M., Returns to Capital in Microenterprises: Evidence from a Field
Experiment (May 1, 2007). World Bank Policy Research Working Paper No. 4230
12 McKenzie, David John and Woodruff, Christopher M., Experimental Evidence on Returns to Capital and Access to Finance in
Mexico (March 2008)
13 Campion, Anita, Ekka, Rashmi Kiran and Wenner, Mark, Interest Rates and Implications for Microfinance in Latin America and the
Caribbean, IADB (March 2012)
14 ibid
15 DeYoung, Robert and Phillips, Ronnie J., Payday Loan Pricing (2009)
Interest rate caps and their impact on financial inclusion
8

https://assets.publishing.service.gov.uk/media/57a08a0de5274a31e00003d0/Interest_rate_caps_and_their_impact_on_financial_inclusion.pdf