njuguna ndung ’ u : cooperation between the bank of mauritius and the central bank of kenya remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the signing ceremony of the memorandum of understanding between the bank of mauritius and the central bank of kenya, central bank of kenya, nairobi, 8 august 2011. * * * mr. rundheersing bheenick, governor of the bank of mauritius ; members of the press ; colleagues ; ladies and gentlemen ; i am privileged to welcome governor rundheersing bheenick of the bank of mauritius to nairobi and to the central bank of kenya. governor, we thank you for making the time to be here at this auspicious occasion and trust that you are having a pleasant stay so far. ladies and gentlemen : today ’ s event is a monumental one in that it marks the establishment of formal supervisory relations between the central bank of kenya and the bank of mauritius. we began the process of establishing formal cooperation between the bank of mauritius and the central bank of kenya in 2009 and today ’ s signing of the memorandum of understanding between the bank of mauritius and the central bank of kenya will be a culmination of that process. the mou is premised on the need to enhance cooperation in the sharing of supervisory information between our two institutions. it will help define and guide our working relationships in addition to enabling the smooth exchange of supervisory information between us. one kenyan bank ( i & m bank ) has already established a presence in mauritius while other banks are also considering exploring opportunities in mauritius. similarly, banks from mauritius have direct and indirect commercial relations with our kenyan institutions. ladies and gentlemen : the global financial crisis has reinforced the importance of effective dialogue and collaboration between banking supervisors. indeed, one of the biggest lessons learnt from the financial crisis has been the need for better regulation of financial institutions. the crisis has also provided an abundance of examples highlighting the importance of supervisory cooperation. as a result, a key initiative of the basel committee on banking supervision has been to recommend enhanced promotion of cooperation between supervisors globally in order to facilitate an efficient exchange of information. such coordination and communication is the basis for promoting robust risk management practices and developing sound supervisory standards. cross - border cooperation is a prerequisite for establishing effective resolution techniques for systemically important banks having cross - border operations. it is therefore apparent that it is no longer possible for any one regulator to adequately supervise institutions that operate across the globe, hence

community, banks with cross border operations continue to report operational challenges. the major operational challenge is the need for a huge capital outlay, which could otherwise be minimised through centralisation of some operations and decision making. with the advancements in information technology, centralisation of some operational processes is being embraced globally based on the resultant cost savings as along as adequate risk mitigating measures are assured. in this regard, i urge regulators in the eastern africa region to always embrace a developmental mindset as they consider proposals by market players. as long as adequate risk mitigation measures are demonstrated, innovations should be facilitated. it is only through this that our banking sectors will effectively play their roles of resource mobilisation, allocation and deepen the market. more importantly, innovations will reduce the cost of banking services and products. lower costs are critical to tapping the vast unbanked populace in our region. ladies and gentlemen : the output from this meeting will provide a framework to enhance effective supervision of the kcb group. it will also set precedence for the supervision of other banking groups with cross border operations. i acknowledge the presence of kcb management who i am informed will showcase their strategy and operational plans. it is through a clear understanding of institutional strategies and plans that supervisors are able to proactively discharge their supervisory mandates. ladies and gentlemen : i believe that there is a great wealth of supervisory information and ideas to be shared in this supervisory college. as the east african central banks, there is need to be steadfast in supervision of institutions with cross border operations to minimise the likelihood of systemic effects in case of failure. i therefore wish to reiterate the importance of seizing this opportunity to discuss mechanisms of enhancing regional coordination in supervision as well as crisis management / mitigation. with these few remarks ladies and gentlemen, it is now my honour and pleasure to declare this inaugural supervisory college meeting officially opened and i wish you fruitful deliberations. thank you bis central bankers ’ speeches