Banks sucked into Triton oil saga

Three small banks invested in Triton Petroleum short-term notes, it emerged on Tuesday. Even as the Central Bank of Kenya on Monday moved to calm the market over the Kenya Pipeline Company scandal, fresh details showed that the institutions had put in Sh500 million.

Short-term notes are used by firms to borrow on the strength of their balance sheets. Interestingly, the note was rated A1/A+, indicating top credit rating. One invested Sh200 million with the other two dedicating Sh150 million each. Guardian Bank which took space in the newspapers to de-link itself from the saga is not one of them.

Central Bank on Monday came out to assuage fears following unconfirmed reports that several banks, especially a few small ones, are at risk from the crisis.

“The amount is not considered material to cause instability in any of the individual banks or the banking sector in general as the concerned institutions are well capitalised,” CBK governor, Prof Njuguna Ndung’u said.

“The banks are also holding securities to cover the credit exposure.”

CBK puts the amount sourced from local banks at Sh2.5 billion contributing to slightly less than 0.002 per cent of the total banking industry assets valued at Sh1.2 trillion in October 2008 — the latest figures available.

As a percentage of gross loans and advances, valued at Sh679 billion at the same period, the Sh2.5 billion translates to about 0.4 per cent.

Colluded

In what was termed as fraud by Energy minister, Kiraitu Murungi, three major international oil trading companies that finance petroleum imports into the region risk losing Sh7.6 billion.

That is after KPC officials colluded with the troubled Triton to clandestinely release 126 million litres of petroleum products from the company without the knowledge and authority of the financiers.

On Monday, KCB sought the intervention of Mr Murungi to recover Sh1.8 billion that it stands to lose following KPC’s decision to release 30 million litres of oil to Triton, now in receivership. To KCB with a total loanbook of Sh90 billion, the Sh2 billion is relatively insignificant.

The bank moved to court over the matter where it secured an order stopping any dealing in the property of Triton, and some that are traceable to directors. It is on the strength of the order that CBK says KCB has security over the guarantee it had granted Triton.

The same can not be said of banks investing in short term papers which are guaranteed by the balance sheet of the company. In the case of the three banks, it is that of Triton.

Other financiers laying claim on the Sh7.6 billion oil are Glencore of UK, which risks losing Sh2.3 billion, Fortis of France (Sh906 million) and Emirates National Oil Company (Sh2.5 billion).