Equity Group Ltd., Kenya’s biggest lender by market value, led a second day of declines among the country’s banking stocks after regulators placed a smaller rival under administration.
The stock tumbled 6.3 percent to 40.75 shillings by 10:14 a.m. in the capital, heading for its biggest drop since September 2014. Co-Operative Bank Ltd., the third-largest lender, slid 3.9 percent as Barclays Bank of Kenya Ltd. retreated 2.4 percent and Kenya Commercial Bank Ltd. fell 3 percent.
Kenya’s central bank announced on Tuesday that Imperial Bank Ltd., a privately held lender, had been placed under statutory management because of “unsafe or unsound business conditions.” It’s the second bank to be taken over by the regulators since Dubai Bank Kenya Ltd. was seized by the authorities in August.
“Perception-wise, it doesn’t paint a nice picture, coming as it does so soon after the collapse of Dubai Bank,” said Kenneth Minjire, an analyst at Genghis Capital Ltd. in Nairobi. “It doesn’t look good to investors who will be watching the sector, especially foreign investors.”
The Kenya Bankers Association, an industry lobby group, said the closure of Imperial Bank doesn’t present any systemic risk to the industry. That echoed a statement by the central bank on Tuesday, which said the industry remains “safe and robust.”
Imperial Bank had total assets of 70.3 billion shillings ($681 million) at the end of June, according to the company’s financial statements. That compares with 566 billion shillings at Kenya Commercial Bank, the largest lender by assets.