National Bank of Kenya puts CEO on leave before audit

Bloomberg

National Bank of Kenya Ltd. placed Managing Director Munir Ahmed on compulsory leave pending an internal audit, a day after dismissing speculation on social media that he’d been fired.
Five top managers were also sent on leave, the Nairobi-based lender said in an e-mailed statement. The board appointed Wilfred Musau as acting-chief executive officer, it said.
“The aforementioned actions by the board are an unequivocal demonstration of our commitment to strict adherence to corporate governance tenets and the various Central Bank of Kenya guidelines,” Chairman Mohamed Hassan said in the statement.
The Kenyan central bank said it welcomed the actions at National Bank after board members briefed officials about “emergent concerns and their proposed actions going forward.” The bank issued a profit warning on Wednesday, saying that annual earnings would fall at least 25 percent because of increased bad debts.
Ahmed said he disagreed with the board placing him on compulsory leave.
“I don’t want to speculate on what’s behind the board’s decision,” he said in a phone interview. “I totally disagree with the decision. It’s not in line with corporate-governance practices.”
National Bank, which ranks as Kenya’s 10th biggest lender, in January scaled back plans to expand after the government failed to approve proposals by the state-controlled lender to raise capital. Kenyan Treasury Secretary Henry Rotich said in October the government is considering merging National Bank with Consolidated Bank of Kenya Ltd., Development Bank of Kenya Ltd. and other state-owned lenders as part of a plan to sell government assets to private investors.
Earlier this month, the government canceled its plan to provide 4.9 billion shillings ($48 million) for the bank’s proposed rights offer.
Shares in National Bank fell as much as 9.3 percent to an 11-year low on Tuesday, before recouping its losses to close down 0.7 percent at 14.45 shillings. Four times the three-month daily average of shares traded during the day.
“Government withdrawing funds meant for the rights issue will significantly constrain the bank in growing its balance sheet,” Standard Investment Bank analyst Francis Mwangi said by phone from Nairobi.