central bank of kenya 7th kenya bankers association annual banking conference thursday, september 27, 2018 keynote address by dr. patrick njoroge, governor, central bank of kenya as prepared for delivery good morning! i want to begin by thanking the kenya bankers association ( kba ) for inviting me to speak at this auspicious annual banking conference. i applaud kba for organizing this conference for the last seven years, and contributing to thought leadership on topical banking sector issues. the theme of the conference ‘ ‘ credit market dynamics in an evolving regulatory and market participants ’ environment ’ ’ is quite apt given the conjuncture — where the global, regional and national financial markets are today. for instance, in kenya, there has been considerable discourse recently on the cost and availability of credit. the discussion is now morphing to the potential role of disruptive non - traditional credit providers that leverage on technology, but discussions about consumer protection in these new environments has not gathered much steam. however, i am informed that these issues will be discussed during the conference and i look forward to the findings. the year 2018 has been a year of anniversaries. on august 7, we marked twenty years since the bombing of the american embassy in nairobi, just a few steps away from the central bank building. and just a few days ago, on the 21st of september, we marked the fifth anniversary of the westgate attack. both of these were tragedies, marked with sombre reflections by our fellow citizens. we marked another recent anniversary that is less familiar to many ordinary kenyans, but one that is felt acutely by practitioners in the financial sector. ten years ago, on september 15, 2008, the storm that had been brewing for a year finally broke. lehman brothers, a company that had been in existence for one hundred and fifty eight years, shut its doors. ordinarily, companies come and go. after all, creative destruction is the mantra of the day and only the fittest survive. new blood, new ideas and new companies are essential to the health of capitalism, and, conversely, old ideas and old companies must be discarded when the time comes. but, of course, lehman was different. the canary in the coal mine was dead. the deluge was upon us. the effects of the global financial crisis were deep, powerful and lasting. some are being felt to this very day. the ordinary citizen — wanjiku — may not give you the precise details of what

well as participated in several cgbs conferences. there are also other speakers whom we anticipate hearing from over the next few days, who are not here this morning but who i would also wish to recognize at this time. • mr. franz mcconney the regional head of operational risk at the firstcaribbean international bank who will be providing some industry perspectives on risk management and governance in a financial group ; and • mr. gregor heinrich, the chief representative at the bis americas office located in mexico city, who will be joining us on friday and will address the seminar on the on the role and work of that office. we welcome and thank all the speakers for joining us this week and look forward to your respective contributions to the subject at hand. to our supervisory colleagues from across the caribbean, … and i note that we have representatives from nine regional jurisdictions ( other than jamaica ) – we are pleased to be your hosts over the next few days and trust that the dialogue, experiences and approaches shared will serve to advance our individual and collective efforts to enhance our framework and capability to conduct effective conglomerate and consolidated supervision. the matter of consolidated supervision is very much at the forefront of the supervisory agendas of our member countries. in recent years we have seen growth in financial groups not only in our domestic markets but also in our regional markets, as institutions have sought to defend and increase market shares, gain competitive edge and increase margins. this growth has accelerated significantly in recent years, facilitated in particular, by technological innovations and the lowering of trade barriers. most notably for us here in the caribbean, the advent of the caribbean single market and the prospect of the eventual single economy, has seen the removal of certain legal, economic and trade barriers, making it a bit easier for regional financial integration. over the past decade a number of large regional groups have emerged : • through diversification into non - deposit financial services ; • through mergers and acquisitions of banking and non banking financial entities ; as well as • through cross border forays. first caribbean international bank readily comes to mind as one such group, as does rbtt / guardian life, sagicor / life of jamaica, national commercial bank / aic to name some – all regional conglomerates with a presence in several regional markets and with product offerings spanning the gamut of financial operations …. here i speak of not only banking, but securities dealing, insurance, money services, pension fund management, and mutual funds. …. and even as we gather