Central Bank of Kenya (CBK) has censured Ecobank Kenya Limited for breaching foreign exchange exposure limits, barring the lender from the forex market from today until April 4.
CBK said that the tier-two lender failed to meet the rules that stipulate that a bank must match its foreign currency assets and liabilities and ensure that the difference between the two does not exceed 10 percent of core capital.
Any mismatch to the negative is supposed to be filled through borrowing from other lenders, in order to limit exposure to foreign currencies.
According to the CBK press release on the matter, Ecobank failed to prevent a breach of the limit, arising out of a specific transaction—the details of which the regulator did not provide.
Ecobank’s core capital as of September 2021 stood at Sh6.01 billion, meaning that its limit would be capped at around Sh600 million ($5.22 million).
“In investigating Ecobank’s trading practices and a specific transaction that it had concluded, it is evident that Ecobank did not have sufficiently robust risk controls to prevent breaches on its foreign exchange exposure limits, or the inaccurate reporting of its position,” said the CBK on Monday.