KDIC Situation Room: Lessons on Crisis Management and Bank Resolution
When the Kenya Deposit Insurance Corporation (KDIC) staff gathered on the outskirts of Naivasha town one chilly morning last month, nobody -save for their facilitators-knew what to expect. They were here for a workshop-the first of its kind. Those who at least had an idea, could only speculate on the subject matter- never mind, they still lacked the finer details on an effective strategy and contingency planning, should they find themselves in similar circumstances. (See related articles by Paul Manga and Nancy Ochego)
Welcome to KDIC’s ‘situation room’ on Crisis Management and Bank Resolution workshop. And so when the Corporation’s Chief Executive Officer Mr. Mohamud Mohamud took to the podium to make his opening remarks, he encouraged his team to seize the opportunity and deepen their knowledge, mastering the dos and don’ts of managing a crisis during bank resolution. “I urge you to have an open and flexible mind. Please take this as a personal training development because it is the only way you will build your capacity given that KDIC is a knowledge-based organization,” he explained. Making reference to the KDIC’s mandate, Mr. Mohamud added that the workshop was part of the Corporation’s strategic objective to develop internal capacity for contingency planning, crisis preparedness and bank resolution.
During the 3-day workshop organized by the Paul Manga-led Directorate of Risk and Examination, KDIC staff were taken through a simulation exercise on crisis management and bank resolution, in line with the Corporation’s mandate. ‘Deposit Insurance,’ ‘Bank Resolution Framework’ as well as case studies, were some of the highlights of the workshop.
Empowered to serve…! Team Leader Mr. Mohamud Mohamud and a section of staff in a group photo during the workshop on Crisis Management and Bank Resolution.
Making their submissions after the training, KDIC staff commended Management for enabling them to understand what exactly takes place during the process of resolving problem banks.
“I must say that the training provided better insights into bank resolution process from start to finish. Absolutely timely and well thought out it terms of planning and finally execution. I was impressed!” concluded Dorcas Wanjala, Resolutions Manager.
For Kennedy Yegon who is in charge of ICT, familiarization with the entire ecosystem of bank technology was key. He observed that: “For us in ICT, it was critical to understand bank operations in the unlikely event of a crisis. These would include issues to do with backup, technology, service providers, coordination, and would-be solutions. In all these, speed is of the essence.”
On his part Sukantet Ranka who works in the Procurement Department said that the application of the ‘lesser cost rule’ and implementation of the Risk-Based Premium model was quite enlightening.
Over the last few years, KDIC has made great strides in line with its enhanced mandate enshrined in the KDI Act, 2012. These include the revised deposit coverage limit of Ksh500,000 implementation of the Differential Premium System among others. Differential Premium System model, ensures equity in the premium assessment process in line with the Corporation’s core mandate. The model, enables the Corporation to differentiate risk appetite among banks and effectively assign premiums for each risk category.
The statutory body which is the country’s Resolution Authority, is mandated to promptly resolve troubled banks, provide deposit insurance for customers of member institutions as well as provide incentives for sound risk management.