Bank Property Auction: Banks in Kenya have stepped up property auctions in a bid to recover money from defaulted loans. The latest data from the Central Bank of Kenya shows that the amount of defaulted loans has decreased as these bank auctions spike
For example, in the four months to June 2021, the amount of defaulted loans dropped by Sh. 25.9 billion from Sh. 442.2 billion to Sh. 418. 3 billion.
CBK Governor Patrick Governor said that the decrease in the amount of defaulted loans was a reflection of both bank auctions or recoveries, and actual loan repayments. “It is important to appreciate that both of these (recoveries and repayments) are happening. This actually shows that banks are working with their customers,” he said.
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In the same vein, auctioneers have been reported as saying that there is increased uptake and interest in property that is under auctioning.
“Sales through auctions are improving but are still low. But there is increased partnership between the banks and the debtors on how to sell the properties jointly. Banks have noted that the movement of these properties through auctions is not as fast as they would want and so the multiple approach (of auctions and private treaties) is what is working,” said Leakey’s Auctioneers were quoted in a local daily on the bank property auction.
At the same time, local banks have been embracing private treaties to boost repayments. This includes arrangements whee borrowers come into agreement with banks on how to either repayment at lesser installments, or on how to look for fair market prices to offload the property instead of losing it to auctioneers.
These treaties gained momentum after real estate property that banks had put up for auction failed to attract buyers, leaving most lenders with dead weight.