For over 30 years, the government has been running around in circles and throwing hundreds of taxpayer millions at this problem without success.
All past attempts by the Privatisation Commission to restructure and privatise the bank did not succeed, largely because of resistance by influential individuals who did not want to see their piggy bank go.
Indeed, very few state corporations have received as much taxpayer money, mainly bailouts, shareholder loans and subsidies, as the National Bank.
In 1998, the government pumped in a whopping Sh4.5 billion in the form of a shareholder loan to the bank.
Here’s my take on the efforts of the Parliamentary Committee on Finance, Planning and Trade to block the planned takeover of the National Bank by the Kenya Commercial Bank.
First, we must all agree that the committee does not have domain knowledge and experience on how bailouts of distressed State-owned commercial banks should be conducted.
Secondly, that although Parliament has wide powers to oversee what the Executive is doing, that role does not include the power to move in to consummate individual transactions, direct bailout options, and order the bailout methods that should be adopted.
Thirdly, that the powers and roles of the committee in such transactions should be to provide oversight over the process followed and to give broad directions on the legality, or not, of such transactions.
Fourthly, we must agree that in jumping into the fray on the proposed takeover of NBK by KCB, the committee must not pretend that it has powers to micro-manage, meddle and even countermand decisions by the relevant regulatory bodies — in this case — the Central Bank of Kenya, the Capital Markets Authority and the Competitions Authority of Kenya.
These are the entities that possess deep domain knowledge and experience on how bailouts of financial institutions are conducted. Just the other day, a parliamentary committee pretended that it had powers to make executive decisions when it directed that Kenya Airways should be nationalised instead of being merged with the Kenya Airports Authority.In the present case, the committee has become as meddly as to go to the extent of giving a directive of the restructuring options that should be adopted by the Executive. The way things are going, it should not surprise us if a parliamentary committee pops out to direct the Central Bank on which bank should be closed, or even […]