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{
    "id": 700605,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/700605/?format=api",
    "text_counter": 117,
    "type": "other",
    "speaker_name": "",
    "speaker_title": "",
    "speaker": null,
    "content": "Mr. Speaker, Sir, the Imperial Bank Limited was admitted into the KTDA panel of approved banks in June 2011. An initial investment limit of Kshs500 million was imposed but this limit was reviewed in subsequent years. By June 2015, the approved limit for Imperial Bank Limited was Kshs3 billion. At the time Imperial Bank Limited was placed under receivership on 13th October, 2015, KTDA had invested a total of Kshs27.61 Billion in 12 different banks. The money was accumulated for the planned payment of farmers’ final payment for 2014/2015 Financial Year. The payment was due on 23rd October, 2015. Mr. Speaker, Sir, we are provided with a breakdown of 12 banks and the amounts of money that had been placed in them as deposits totaling to Kshs27.614 billion. Mr. Speaker, Sir, by spreading cash sales with different banks, KTDA mitigates the concentration risks through diversification of investments across several banks. The amount held in each bank is based on interest rate competitiveness at the time the deposit is invested subject to the limit for each bank. Over the years, Imperial Bank Limited had recorded significant growth in both assets and profitability. At the close of 2014 Financial Year, with a balance sheet of Kshs57 billion and profitability of Kshs2.69 billion, there were no reasons to doubt the bank’s performance. The bank was ranked number 17 in asset base, out of 43 banks in Kenya, there were no adverse regulatory reports and it continued being licensed by the regulator; the Central Bank of Kenya (CBK). Mr. Speaker, Sir, Chase Bank was approved to join the Kenya Tea Development Agency (KTDA) panel of commercial banks in June 2012 and an initial investment limit of Kshs1 billion was placed. By June 2015, the investment limit for Chase Bank had been pushed upwards to Kshs5 billion. However, in February, it was reviewed downwards to Kshs2 billion after Imperial Bank went into receivership. At the time Chase Bank Limited was placed under receivership on 7th April 2016, KTDA had invested Kshs1.928 billion. As at that point in time, KTDA had a total of Kshs21.53 billion invested in 10 different banks with the highest amount being with Cooperative Bank of Kenya Limited at Kshs5.9 billion. KTDA mitigated against concentration risks through diversification of investments across a number of financial institutions. With regard to the value from the investments in Imperial Bank and Chase Bank Limited, I want to summarise as follows: Over five years during which deposits were placed at Imperial Bank, KTDA made a gross interest income of Kshs383million and Kshs301 million from Chase Bank which was about Kshs684 million from investments in those banks. KTDA investments generate high returns which contribute to the farmers’ income pay out as part of the annual bonus. The other question was for me to explain the steps taken by KTDA to prevent possible loss of farmers’ money held in various commercial banks, especially following the closure and placement of the two banks under receivership. Mr. Speaker, Sir, KTDA has approved 15 banks. These banks were approved by the Board of KTDA. You will notice that there are 43 licensed banks, but only 15 banks were approved by the KTDA Board. Therefore, current investments reflect money being accumulated to pay current year bonus to tea farmers and spreading investments to The electronic version of the Senate Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor, Senate"
}