Reports and claims are now emerging that Equity Bank’s chief executive may have mislead Kenyans when he said that Equity Bank does not offer loans to its directors on live TV.

These reports come at a time when the local banking sector is suffering from a crisis of confidence following the closing of three banks withing a span of one year.

While participating on a live TV discussion on Citizen Tv on Wednesday on the state of banking in Kenya, Dr. Mwangi is claimed to have said that Equity Bank banned loans to its directors ten years ago.

The discussion, which featured KCB CEO Joshua Oigara, Barclays Bank CEO Jeremy Awori, and NIC Bank CEO, came hot on the heels of the placing under receivership of Chase Bank, which had understated the amount of insider loans it had given out.

The reports that Dr. Mwangi had been untruthful in his statement first emerged on the Buyer Beware Facebook page which is a platform that alerts the public on misleading, and or fraudulent businesses and Kachwanya.com 

Although Bizna was not immediately able to get a response from Equity Bank, it put the question forth to financial markets experts in a bid to clear the air on whether indeed, Equity bank had banned issuance of insider loans to directors. According to Rober Ochieng’, a financial markets expert, it could be that the Equity chief meant that only executive directors are given loans and not non executive directors. He said: “I think he meant only executive directors are given loans. Executive directors are board members who are also part of the staff.”

According to a full year financial statement posted by Buyer Beware and Kachwanya.com (see this link and download the first pdf file at the bottom of the page – it is the Equity Banks’ Financial Statement ended 31st December 2015), Insider Loans and Advances given to Directors in the year 2015 were about shs 1.73 billion and insider loans and advances given to employees were about 5.85 billion, which summed up to over shs 7.5 billion. For the Equity Group (Consolidated), the Insider Loans and Advances summed up to over shs 7.43 billion for the financial year ended 31st December 2014 and over shs 8 billion for the financial year ended 31st December 2015.

READ: Equity Bank : we did not defraud borrower in Shs. 150 m in chairman Munga’s share deal

Further, according to Paul Maina, the head of research at Relic Capital, Equity bank’s total loan book related to directors decreased from Sh. 1.103 billion in 2014 to Sh. 1.068 billion in 2015. “during the year, Sh. 997 million in loans were repaid by the directors ad they advanced Sh. 870 million to them thus being a net repayment in the ‘director only loan book,” he says adding that the annual report asserts that these are loans to associates of both executive and non-executive directors.

Bizna is currently seeking a response from Equity bank on the matter. More to follow…

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