##nated swaps and other eurodenominated transactions once the uk has formally exited the eu. these are just two of the most prominent examples of the regulatory uncertainty that is troubling the financial sector in the wake of the ukreferendum. further questions such as the free movement of labour, goods and services affect the uk economy as a whole and with it all the clients of banks. given that formal negotiations have not even started yet between the euand the uk, there are still plenty of plausible scenarios for their future relations, and thus for the environment banks will have to operate in. this uncertainty surrounding brexit will stay with the financial sector for some time to come, and there is no easy way around it. let ’ s move on to the second issue, which concerns regulation more generally. earlier this week, i was in santiago de chile to meet with my colleagues from the basel committee, where we discussed details for completing basel iii. the rules based on this regulatory regime are currently being finalised and phased in. important aspects of the current negotiations are the revisions made to the level and the calculation of capital requirements. the need to adapt to, and comply with these new requirements is imposing costs on banks and causing headaches among bank managers. this holds for european financial institutions in particular. in comparison to brazil, for example, the use of internal models for calculating riskweighted assets and thus capital requirements is widespread in europe. consequently, any changes to this approach – as currently discussed – have much stronger implications for european banks than for their counterparts elsewhere. it is therefore crucial that the final result of our current negotiations will be regionally balanced and does not undermine the risk - oriented approach of the basel framework. the committee was not able to reach such an agreement yet. we will continue our negotiations with the goal of ending regulatory uncertainty as soon as possible. and we will work towards finding a compromise before the committee ’ s oversight body – the group of governors and heads of supervision – will meet in january. 2 / 5 bis central bankers'speeches in parallel with reforming basel iii, in europe we have established the banking union with a whole new supervisory architecture at its core – the single supervisory mechanism. this supervisory mechanism is still relatively new territory for banks, as it has just recently celebrated its second anniversary. as you can see, the regulatory and supervisory world is changing significantly and rapidly for banks. keeping up with these developments is a challenging task. on top of that, we are currently

banking services reach especially to rural areas to help drive increased domestic savings. 5. in this regard, it is imperative for stakeholders to explore mechanisms to deliver financial services and push forward the financial inclusion frontiers in tandem with vision 2030. as a first step in pushing the initiative forward, the banking act was amended through the finance act 2009 permitting banks to use third parties ( agent banking ) to provide certain banking services on their behalf. i take this opportunity to urge banks to take advantage of the new provision. the agent banking model was designed to assist banks to lower their cost of offering banking services while at the same time improving their earnings as more kenyans are offered an opportunity to access financial services. 6. the kenyan banking sector continues to perform well despite the global financial turbulences and challenges on the domestic front. the sector ’ s total assets increased by 21 % from ksh. 1. 20 trillion in march 2009 to ksh. 1. 45 trillion in march 2010 whereas deposits increased by 23 % to ksh. 1. 14 trillion over the same period. profit before tax for the sector increased by 33 % from ksh. 12. 8 billion in the first quarter of 2009 to ksh. 17. 0 billion in the first quarter of 2010. this is remarkable, especially against the backdrop of domestic shocks and global financial crisis. 7. despite the impressive performance by banks, customers still have to contend with high borrowing costs. although many banks have responded to central bank ’ s plea of lowering interest rates, it is our expectation that all the banks should follow to support the economic growth via the support of expanded private sector credit at an affordable cost. on our part, we should now ask the real sector to access and negotiate credit in line with their potential investment. 8. finally, let me reiterate that central bank and indeed the government of kenya will continue to pursue policies that create a conducive environment for growth of the financial sector and encourage the provision of banking services to majority of the un - banked kenyan population at affordable cost. for us to be successful in this, we need to support strong institutional growth and remove underlying constraints that inhibit growth and financial reach. 9. with these few remarks ladies and gentlemen, it is now my honour and pleasure to declare the new brand of consolidated bank of kenya officially launched. thank you and god bless you all.