Flight to safety gifts Equity Bank $339m in customer deposits

Banking crisis gifts Equity Bank Sh35 billion in customer deposits

Equity Group’s liquidity ratio has more than doubled its minimum statutory requirement after it got an additional Sh35 billion customer deposits in the last financial year.

According to its financial statements for the year ended December 31, 2016, the group – which operates in six countries – benefited from the deposit flight that saw customers move money to banks they considered more stable.

Equity’s liquidity ratio, a yardstick for measuring a lender’s ability to meet short-term liabilities, is now at 47.6 per cent against the statutory minimum of 20 per cent.

This is from 33.2 per cent at a similar time last year.

Last year, Dubai Bank, Imperial Bank and Chase Bank faced serious integrity crises, forcing the regulator to put them under receivership.

This resulted in panic withdrawals, leading to skewed distribution of deposits among the 43 banks. ALSO READ: KCB forced into 300pc pay rise for S Sudan staff after inflation woes “Banks were initially perceived to be of the same risk, but after the receivership, two curves emerged on the interbank (market) and banks perceived to be of high risk were borrowing at much higher rate. Customers had to move money to where they felt safe,” said Equity Group Chief Executive. 

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