Kenyan President Uhuru Kenyatta caps interest rate
Following President Uhuru Kenyatta’s (pictured) signing of a law capping the interest rates lenders can charge on loans, shares of Kenyan banks have plunged. According to reports, Kenyatta signed the law in sympathy with Kenyans frustrated by the cost of credit and poor savings rates. KCB Group Ltd., the country’s largest bank by assets, slumped the most, dropping to its lowest level since December 2012, while Cooperative Bank Ltd. plummeted the most on record. Equity Group Holdings Ltd., the market leader in terms of value, saw the biggest one-day decline in seven years. According to Bloomberg, after the stock market closed on Wednesday 24 August, Kenyatta announced that he’d agreed to changes to the Banking Act, requiring that lenders peg credit costs at 400 basis points above the benchmark central bank rate. The law also requires financial institutions to pay interest of a minimum of 70% of the CBR on deposits.