Credit Bank Defies Court Order in Land Seizure as It Faces Existential Threat Over Sh1.7bn Capital Black Hole

Desperate lender accused of flouting High Court injunction while racing December deadline that could strip its banking license

Cash-strapped Credit Bank Plc is fighting for survival on two fronts: a mounting legal crisis over allegations it brazenly defied a High Court order to seize land in Loresho, and a ticking regulatory time bomb that could see it stripped of its commercial banking license in less than three months.

The embattled mid-tier lender stands accused of forcefully taking over prime property in Loresho despite an explicit court injunction forbidding any sale, transfer, or occupation.

Landowners claim the bank colluded with land registry officials to illegally alter ownership records, with bank-affiliated security personnel blocking access and behaving as though the property had been lawfully acquired.

Court documents reportedly show clear restraining orders against such actions, yet witnesses say these directives were openly violated—raising alarming questions about whether financially distressed institutions are willing to trample the rule of law to survive.

The alleged land grab comes as Credit Bank faces an existential threat.

With core capital of just Sh1.28 billion, the lender must raise an additional Sh1.72 billion by December 2025 to meet the Central Bank of Kenya’s new Sh3 billion minimum threshold.

Failure means downgrade to microfinance status or outright license revocation.

But the capital shortfall is merely the visible wound of a deeper hemorrhage.

Industry sources reveal that approximately 60 percent of Credit Bank’s loan book is classified as non-performing—meaning three out of every five borrowers have stopped paying.

This represents one of the worst delinquency ratios in Kenya’s entire banking sector and has pushed accumulated losses to Sh2.18 billion as of end-2024.

The bank’s liquidity ratio has collapsed to 15.1 percent, well below the statutory 20 percent minimum, leaving it starved of cash to meet daily obligations.

Auditors PricewaterhouseCoopers have cast explicit doubt on Credit Bank’s ability to continue as a going concern, warning that “material uncertainty exists” about its survival.

It is against this backdrop of financial catastrophe that the Loresho controversy has erupted. Credit Bank has publicly announced plans to “aggressively sell collateral” and “complete stalled projects” to generate desperately needed liquidity.

The disputed land seizure appears to fit this pattern—a lender so cornered it may be willing to defy court orders to squeeze value from any available asset.

Legal experts warn that if the contempt allegations are proven, Credit Bank could face sanctions that would further destabilize its already precarious regulatory position.

The reputational damage alone could prove fatal for an institution already struggling to maintain depositor confidence.

The scale of Credit Bank’s loan book deterioration has sparked uncomfortable questions. How did 60 percent of loans turn bad? Were insiders given preferential treatment? Was collateral properly assessed or deliberately inflated? Did governance mechanisms simply collapse?

Analysts suggest such extreme delinquency points not to economic headwinds but to systemic mismanagement or worse.

Credit Bank is one of eleven commercial banks collectively facing a Sh15.04 billion capital deficit against the December deadline.

Others include Consolidated Bank of Kenya (Sh3.7 billion shortfall), Access Bank Kenya (Sh3.4 billion), UBA Kenya (Sh1.51 billion), and CIB International Bank (Sh1.09 billion).

The Business Laws (Amendment) Act, 2024 requires progressive capital increases to Sh10 billion by 2029—Sh3 billion by end-2025, then Sh5 billion, Sh7 billion, Sh8 billion, and finally Sh10 billion in successive years.

CBK Governor Dr Kamau Thugge has defended the standards as necessary to strengthen sector resilience, predicting they will trigger consolidation through mergers and acquisitions.

For banks missing the December target, the CBK has outlined stark options: downgrade to microfinance status (requiring just Sh60 million capital), extended deadlines for struggling lenders, or law amendments to allow tiered capital requirements for niche players.

Some foreign-owned banks have secured parent company lifelines.

UBA Kenya is pursuing capital injection from Nigeria’s UBA Plc. Ecobank Transnational injected Sh3.5 billion into its Kenyan unit in March.

Dubai Islamic Bank has a Sh6.7 billion standby facility from its UAE parent.

HF Group successfully raised Sh6 billion through a rights issue, vaulting it above the threshold into tier II status.

Credit Bank, linked to the family of late politician Simeon Nyachae, has fewer obvious options.

Plans to list on the Nairobi Securities Exchange’s Unquoted Securities Platform may struggle to attract investors given the scale of accumulated losses and asset quality deterioration.

Management led by CEO Betty Korir has indicated willingness to negotiate with defaulters and pursue aggressive debt collection. But these measures appear inadequate against the twin challenges of capital inadequacy and a loan book in meltdown.

The Loresho land dispute represents more than a legal skirmish—it symbolizes how far a desperate institution might go when cornered.

For the affected landowners, it’s a fight to protect their property. For Credit Bank, it may be a last-ditch attempt to salvage assets.

For Kenya’s banking sector, it’s a cautionary tale of what happens when weak governance meets regulatory tightening.

The next three months will determine whether Credit Bank can navigate this perfect storm or becomes one of the most dramatic bank failures in Kenya’s recent history.

With the December deadline approaching and legal troubles mounting, the lender appears to be running out of both time and options.​​​​​​​​​​​​​​​​