I&M Bank Rwanda Lost $10.3 Million Under Three Months To Fraudsters

In a shocking turn of events, I&M Bank Rwanda suffered a significant loss of $10.3 million due to fraudulent customer withdrawals in under three months. This revelation has sent shockwaves through the banking industry, triggering urgent investigations in an attempt to recover the staggering amount.

The alarming sum lost by I&M Bank Rwanda surpasses its own net profit of $7.6 million generated from the Rwandan market in the entire financial year that concluded in December 2022. The unauthorized transactions took place between November 1, 2022, and January 17, 2023.

The distressing revelation was made by I&M Group in its annual report, released after the financial year’s conclusion, just ahead of the general meeting with shareholders. The report stated, “Subsequent to year-end, management of I&M Bank (Rwanda) PLC discovered incidents of fraudulent withdrawals through customer wallets amounting to $10.3 million during the period 1 November to 17 January 2023. As of the date of these financial statements, some recoveries have been made, and investigations are still ongoing.”

While investigations are underway, it is important to note that banks typically insure their cash holdings, including cash at hand, cash at the bank, and cash in transit, to protect themselves from such losses. As a result, part of I&M Bank’s losses may be covered by insurance, alleviating the financial burden on the institution.

However, bank insiders fear that in any form of foul play between bank senior managers, their juniors and the web of fraudsters is confirmed, underwriters may fail to compensate for the losses.

Possible internal collusion between rogue bank employees and external fraudsters is suspected to have facilitated Sh1.41billion ($10.3 million) heist at I&M Bank Rwanda executed through customer withdrawals in just two months.

According to insiders, the inordinate transactions were neither flagged nor detected raising concerns to management teams in Kenyan, Ugandan and Tanzanian subsidiaries on how the phony dealings went undeterred.

I&M Bank first entered the Rwandan market in 2012 through the acquisition of a majority shareholding in Banque Commerciale du Rwanda. Presently, I&M Bank holds a 54.47 percent stake in the Rwandan unit through BCR Investment Company, a considerable investment valued at $15.4 million as of December.

With over 65,000 customers served by 18 branches, 33 ATMs, and a workforce of more than 400 employees, I&M Bank Rwanda has been the most profitable venture for I&M Group outside of Kenya. However, this unfortunate incident casts a shadow over its previously thriving operations.

In the financial year that concluded in December 2022, I&M Bank Rwanda reported a net profit of $7.6 million, a remarkable increase from $7.3 million in the preceding period. Meanwhile, the Mauritius and Uganda operations of I&M Group yielded net profits of $4.7 million and $2.1 million, respectively. On the other hand, the Tanzanian unit suffered a net loss of $3.7 million.

Despite this setback, I&M Bank Kenya saw its net earnings rise from $54 million to $74.5 million, contributing to a 37 percent growth in the group’s overall profitability, which reached an impressive $81.8 million.

As investigations continue, stakeholders eagerly await the outcome of the efforts to recover the lost funds. This incident serves as a stark reminder of the importance of robust security measures and constant vigilance in the banking sector to prevent fraudulent activities and safeguard customer assets.