Ecobank under CBK’s spotlight for unsafe trading practices

NAIROBI, Kenya, March 29-The Central Bank of Kenya (CBK) has taken regulatory action against Ecobank Kenya Limited for unsafe trading practices and breaches of the Prudential Guidelines on Foreign Exchange Exposure Limits.

CBK said that the tier-two lender did not have sufficient robust risk controls to prevent breaches of its foreign exchange exposure limits or the inaccurate reporting of its position.

Following the breach, Ecobank has been directed to cease transacting as an authorized foreign exchange dealer in the Kenyan market from Tuesday, March 29 to Monday, April 4.

“During this time Ecobank cannot transact in the interbank foreign exchange market. However, all committed transactions as of March 28, can be settled,” read the statement.

Further, Ecobank will be required to put in place a remedial plan to ensure the operational lapses that led to the non-compliance are addressed by March 31.

“The remedial plan should also point to specific measures to address the unsafe trading practices that led to the non-compliance and to enforce adherence to orderly conduct as stipulated in CBK’s Guidelines on Foreign Exchange,” read the statement from CBK.

Ecobank is also expected to reverse the amount of additional exposure that was created as a result of the regulatory breach.

CBK has been keeping a keen eye on the forex market, at a time when the shilling has been under pressure and dollar supply has tightened in the market.