When the history of Kenya’s banking sector is written, Credit Bank may find itself at a critical inflection point; a classic case study on what happens when internal systems collapse, prudential guidelines are ignored, and reactive strategies replace strategic thinking.
According to its most recent auditor’s report, Credit Bank is in open non-compliance with the Central Bank of Kenya’s (CBK) minimum operating capital requirement.
The bank’s core capital stands at Kshs. 1.3 billion—far below the current threshold and dangerously short of the Kshs. 3 billion that will be required in less than five months under CBK’s new capital adequacy regime. Add to that a liquidity ratio of 15.1%, below the minimum statutory requirement of 20%, and the bank’s financial picture begins to resemble a house built on quicksand.
But perhaps most worrying is its loan book, which can only be described as catastrophic. Three out of every five loans issued by the bank are non-performing, the worst ratio in the Kenyan banking sector. That means 60% of its lending is not yielding returns. The question isn’t just why so many loans are defaulting. The bigger question is: how were they approved in the first place?
At this level of loan delinquency, it becomes difficult to maintain faith in Credit Bank’s internal risk assessment processes. Typically, banks rely on stringent due diligence checks before disbursing credit, vetting borrowers, securing adequate collateral, and determining the feasibility of repayment plans. That’s Banking 101. So when a bank posts a 60% non-performing loan ratio, it no longer looks like poor judgment—it smells like collusion.
Could Credit Bank be the latest in a string of Kenyan banks that have been internally compromised? The industry has seen its fair share of collapses rooted in internal fraud. Chase Bank went under in 2016, partly due to questionable insider lending and creative accounting. Imperial Bank was shuttered after massive insider fraud involving fictitious loans. Spire Bank struggled for years before being absorbed by Equity Bank, weighed down by toxic assets and mounting losses. More recently, Equity Bank itself was forced to sack several staff over internal fraud that targeted the institution’s mobile lending systems.
Is Credit Bank walking down the same well-trodden path of willful ignorance or insider collusion?
When non-performing loans reach such extreme levels, it often indicates that lending decisions were either not independently vetted or were influenced by actors with vested interests. It raises serious concerns: Were loans being issued to insiders, cronies, or shell companies? Was collateral overstated or never verified? Were some borrowers ever expected to repay?
If Credit Bank’s current crisis stems from internal rot, then aggressive recovery efforts will merely scratch the surface. What is needed is an internal audit of its lending practices, a forensic investigation into its largest defaulters, and—if necessary—a public cleansing of the bank’s leadership.
Ironically, the bank now says it will “complete stalled projects” to improve liquidity and “aggressively sell collateral” to raise funds. This creates a paradox. If the bank is already cash-strapped, how does it intend to complete projects without external financing? Moreover, aggressive asset sales may point to desperation rather than strategy.
Selling collateral to recover debts is standard banking practice. But when a bank announces that it will do so “aggressively,” it reveals more about its internal panic than it might intend. What does aggressive look like in practice? Legal battles? Auctioning properties at throwaway prices? Hounding defaulters in the press or courts? That tactic risks eroding customer trust at a time when the bank should be rebuilding credibility.
Another route being explored is “negotiated settlements.” While this sounds more constructive, it still reflects a retroactive attempt to clean up a mess that should never have existed in the first place. Settlements indicate that the bank knows it may not be able to recover full loan amounts. So again, we ask: Who approved these loans, and under what terms?
While the macroeconomic environment has certainly been challenging—with high inflation, depreciating currency, and rising interest rates—most banks have remained stable or found ways to stay afloat. Many Tier 3 and Tier 4 banks have tightened lending, cut operational costs, and improved digital efficiencies. Credit Bank, on the other hand, appears to have steered right into the storm with a poorly anchored ship.
Blaming the economy only explains so much. If 60% of your loans are defaulting, it’s not the weather—it’s the navigator.
For Credit Bank to remain a going concern, it must do more than issue statements. It must ask itself the hard questions: Were we defrauded from within? Did we follow procedure? Can we recover without collapsing?
Until those questions are answered—not just by auditors, but by investigations—the bank’s “aggressive” recovery approach may look less like a lifeline and more like flailing in deep water.
In the end, the story of Credit Bank is still being written. Whether it ends like Chase Bank, Imperial Bank, or Spire Bank depends on how soon the root of the crisis is addressed. One thing is certain: Band-Aids won’t fix a banking system hemorrhaging from the inside.
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