Auditors question Credit Bank’s survival as capital shortfall, rising bad loans, and management silence fuel fears of another Chase Bank-style collapse.
Credit Bank is staring into the abyss, and its silence is deafening. Auditors have raised a damning “going concern” warning, questioning whether the mid-tier lender can survive beyond the next few months. The revelations paint a chilling picture that has jolted Kenya’s banking sector — one that looks alarmingly familiar to the script that led to Chase Bank’s collapse in 2016.
A management letter obtained by The Informant Digital exposes the rot: ballooning loan losses, eroded capital, and a gaping KSh 1.72 billion shortfall that must be plugged by December to meet Central Bank of Kenya’s (CBK) minimum capital requirement. Credit Bank has just KSh 1.28 billion in core capital, barely half of what is required. In blunt terms, the bank is running out of time, money, and credibility.
Worse still, the auditors flag systemic weaknesses in risk management and lending practices. Non-performing loans have surged, forcing heavy provisions that are eating away at the bank’s already fragile buffers. Insiders describe a financial institution “in firefighting mode,” with depositors growing jittery and corporate clients quietly shifting business to competitors.
Yet, management has chosen to bury its head in the sand. Unlike peers who have sought mergers, rights issues, or strategic investors, Credit Bank has offered nothing but vague promises of “strengthening its position.” That lack of a concrete rescue plan has only deepened doubts.
The regulator is watching closely. CBK stress tests show Credit Bank would crumble under a severe downturn, potentially triggering systemic tremors. Options on the table include an extension under strict conditions, a forced merger, or a humiliating downgrade to microfinance bank status — a move that would effectively dismantle Credit Bank as a commercial lender.
For 150,000 depositors, the clock is ticking. While small savers are cushioned by deposit insurance, larger clients — including SMEs reliant on trade finance — face devastating disruption if the bank goes under.
The ghost of Chase Bank looms large. Then, as now, auditors raised concerns. Then, as now, capital shortfalls were ignored until it was too late. The question is not whether Credit Bank is in crisis — that much is already clear. The real question is whether CBK and the bank’s board have the courage to act before history repeats itself.
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