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False alarm sends Equity clients into panic mode
A false alarm on Friday led to massive panic withdrawals at the Equity Bank’s Machakos branch.
An SMS text that circulated in the town and its environs on Thursday evening warned bank customers that the giant financial institution was about to collapse.
Customers filled the bank’s ATM units the whole of Thursday evening.
On Friday, hundreds of customers jammed the banking hall to withdraw their savings.
The bank’s head of security and administration, Maj (Rtd) Marcus Mutua, blamed the alarm on competitors.
The rumour came just a week before the branch was to be officially launched (next Friday) by Vice-President Kalonzo Musyoka.
Mr Mutua said he saw the false message and assured customers that all was well.
All is well
To justify his assurances the bank dispatched to Machakos a Securicor van with more than Sh900 million to ease transactions triggered by the false alarm.
“It is a testimony that all is well with Equity Bank, no one will go back home without his money. At the same time those seeking loans will receive the same, to us it is business as usual”, Mr Mutua said.
Speaking with the Saturday Nation inside the banking hall, a depositor, Mr Timothy Waema, said he received a message in his mobile phone telling him the bank was going under.
“The history of banks going under is not new in Kenya, so I just found myself rushing here at least to save my deposit”, he said.
A building contractor, Mr Sethi Kumar, said he was scared of losing Sh700,000 which he had deposited in form of a cheque this week.
“I want to see the credit manager just to ask him whether I can receive some of my savings just in case”, he said.
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Small depositors should be clearly informed that up to Sh.100,000/= is insured by Depositors Protection Fund. Lack of information is dangerous, the Government should embark on educating masses.
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depositors worldwide can't distinguish strong from weak banks and rely on grapevine. Kenya's biggest systemic risk is not a big bank but rather failure of a medium sized bank leading to a crescendo of panic withdrawals of banks perceived as peer by the public.DPIF must immediately raise insured deposits to KSh 1 million and sensitise depositors while banks clearly display DPIF logo on websites and branches.CBK should publish monthly rankings of bank solvency as the disclosures are infrequent,incomparable and technical.
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The bank clients had every reason to worry because the savings could be all the money they had. The use of text messages to trigger off false alarms need to be treated as a national security matter now. The mobile phone providers should be obliged under law to reveal whoever started the false alarm to the authorities. There is a possibility of bored copy cats out there who may repeat the same scare tactic.
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