The Central Bank of Kenya has taken sanctionary measures against Ecobank Kenya Limited, barring it from taking any part in the foreign exchange market between March 29 and April 4 2022.
According to the apex bank, Ecobank did not have sufficiently robust risk controls to prevent breaches of its foreign exchange exposure limits or the inaccurate reporting of its position.
Kenya requires banks to match their foreign currency assets with their liabilities, ensuring that the difference between the two does not exceed 10% of core capital. It is this rule that the Central Bank slates Ecobank Kenya for breaching.
A statement by the CBK reads: “In investigating Ecobank’s trading practices and a specific transaction that it had concluded, it is evident that Ecobank did not have sufficiently robust risk controls to prevent breaches on its foreign exchange exposure limits, or the inaccurate reporting of its position. Ecobank’s acknowledgement of its obligations as an authorised foreign exchange dealer and its commitment to address the underlying issues is noted. During this time Ecobank cannot transact in the interbank foreign exchange market. However, all committed transactions as of March 28, can be settled.”
In addition to the trade block, the bank has also been directed to reverse the exposure that came up when it breached the forex rule and immediately put in measures to prevent future occurrences. The remedial plan should also point to specific measures to address the unsafe trading practices that led to the non-compliance and to enforce adherence to orderly conduct as stipulated in CBK’s Guidelines on Foreign Exchange,” the statement concludes.
Ecobank began operations in Kenya in 2008 after the acquisition of a 75% stake in EABS Bank, after which it changed its name to Ecobank Kenya Limited and increased its stakeholding to 100% by 2016.