Daily Nation
Kenyans could soon know whether banks have been colluding to fix interest rates on loans after the Competition Authority of Kenya initiated investigations into possible anti-competitive behaviour.
CAK Director-General Francis Wang’ombe told the Daily Nation on Monday that the findings would also establish whether some banks enjoyed dominance that impedes competition.
“We have been conducting market studies within the banking sector. We finalised phase one of study where we looked at the market structure to see whether it was affecting competition within the sector. We realised that the market structure is adequate to enhance competition. We are going to the second phase where we are reviewing whether consumer protection issues are more prevalent in the banking sector and the ones that are to the detriment of the consumers in terms of information asymmetry and switching costs,” said Mr Wang’ombe.
THREATEN CONSUMERS
News of the planned study set tongues wagging on Monday with the Consumers Federation of Kenya, (Cofek) terming it timely. Kenyan banks have been on the spot for failing to cut interest rates on loans in the face of an improved fiscal environment marked by relatively low Treasury Bill rates.
“We welcome the CAK move to do the study. We believe there are too many cartels in the Kenyan banking sector, which threaten the consumers, their interests and sacrifice competitiveness. We hope the same cartels will not control the outcome of the study,” said Cofek Secretary-General C.
Kenya Bankers Association CEO Habil Olaka, however, denied the existence of cartels in the banking industry, saying it is marked by “healthy competition”.
“A number of studies have been done on the effectiveness of the banking sector so far as the drive towards pricing is concerned and there has never been any pointer to any uncompetitive practice. As far as we are concerned as KBA, we have not seen anything that would drive members into a cartel like-behaviour,” said Mr Olaka
Daily Nation Banks face probe over cartel-like behaviour in the pricing of loans
