Imperial Bank collapse boosts Diamond Trust

Publicly traded Diamond Trust Bank gained from the last October’s collapse of Imperial Bank, fresh data from the Central Bank shows, helping it rise to tier-one status.

DTB, controlled 39.28 per cent by the Aga Khan Fund for Economic Development, grew its market share by 690 basis points to 5.32 per cent in 2015 from 4.63 per cent the year before.

As a result, the bank, publicly traded on the Nairobi Securities Exchange, joined the top-tier band an elite group of banks controlling at least five per cent market share  after rising a place higher to position seven in CBK’s rankings.

“Diamond Trust Bank’s deposit base increased mainly in the last quarter of 2015 following the placement of Imperial Bank in receivership,” the regulator says in its Annual Banking Supervision Report for 2015 released last Tuesday.

AKFED played a major role in helping the bank broker the December 3, 2015 deal with the Kenya Deposit Insurance Corporation, which enabled processing of up to Sh1 million payments to depositors of Imperial Bank (in receivership) through DTB and KCB.

That was after an almost two-month agonizing wait for the depositors following the bank’s collapse on October 13, due to an alleged fraudulent loan scheme estimated to be Sh39 billion between 2003 and September 2015.

“They were instrumental in giving us assurance; first to put in some money, but the gap was really large. They have had experience in other countries,” CBK governor Patrick Njoroge said on December 3, referring to AKFED, the investment vehicle chaired by His Highness the Aga Khan. “They have now provided support through DTB.”

KCB got the biggest share in 2015, partly helped by failures of the IBL and Dubai Bank (under liquidation). KCB share increased by 1.41 percentage points year-on-year to 14.1 per cent in 2015 compared with 2014.

The “flight to safety” also benefitted Co-operative Bank whose share rose 920 basis points to 9.83 per cent, while Equity’s climbed 740 basis points to 9.44 per cent.

President Uhuru Kenyatta-owned Commercial Bank of Africa, which replaced CfC Stanbic in top-tier league in 2014 on increased uptake of mobile loan platform Mshwari, witnessed a 460-basis point increase in market share to 5.58 per cent.

Standard Chartered and Barclays banks posted a drop of 270 and 250 basis points in market share, respectively, to seven and 6.94 per cent respectively.

“Banks in large peer group increased their combined market share from 49.9 per cent in December 2014 to 58.21 per cent in December 2015,” CBK says in the report. “This is mainly attributable to Diamond Trust Bank and Commercial Bank of Africa moving from the medium peer group to the large peer group during the period.”