After 50 years of a troubled run, the National Bank of Kenya, as we knew it, has come to an end.
In between, it was a citadel of thieves and charlatans and a case study of how to bring down a bank.
Once upon a time, the politically correct would walk into the bank and walk out with unsecured loans.
Parastatals and their heads would also take out loans they were not planning to pay back, and the Treasury would continue to pump more money into the bottomless pit.
Officially opened in November 1968 to help Kenyans access credit and control their post-independence economy, NBK — as it was better known — has now been merged with KCB, which was also bedevilled by the same mismanagement crisis of the Nyayo era but managed a comeback.
When the National Bank was founded, it was hoped that it would quickly be rolled out into rural areas as a commercial outfit while the Co-operative Bank of Kenya would cater for the emerging cooperatives in the countryside, where settler capitalism was still in place.
But, as Treasury found out, the bank had few branches and the British-run banking behemoth known as National and Grindlays had an intriguing network in both urban and rural towns.
KIBAKI’S APPOINTMENT
The only solution in the hands of the new finance minister — Mwai Kibaki — who had come to the helm after the December 1969 General Election — was to approach Lord Aldington, then the chairman of National and Grindlays, and his Africa manager JC Sheen and persuade them to sell their bank.
Behind the scenes, the Jomo Kenyatta government was nationalising various sectors of the economy, and that explains why after only a few weeks in office, and when National Bank was only 14 months old, Mr Kibaki called a press conference in January 1970 and announced that the government would buy a controlling stake in the British bank, and that National Bank would hold 60 per cent shareholding of the lender.
In London, Mr Kibaki was viewed positively by diplomats, and they said as much.Ian McCluney, the then-British High Commissioner in Nairobi, wrote to Mr JW Lonie, Chancellor of the Exchequer, and told him that Mr Kibaki’s appointment was "likely to be very much to our advantage".That letter, dated January 27, 1970, paved the way for Mr Kibaki’s official visit to the British exchequer that April where he had a well-publicised meeting with Mr Lonie.ABLE […]
