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To: The Street who wrote (20472)	10/2/1998 8:55:00 PM
From: lorne	Read Replies (1) \| Respond to of 116895

Kenyan bank crisis threatens neighbours OWN CORRESPONDENT, Nairobi \| Friday 2.30pm. ------------------------------------------------------------------------ A BANKING crisis in Kenya that has already caused at least four large Kenyan banks to close their doors is now threatening to spill over into neighbouring Tanzania and Uganda. Already two banks in Tanzania and Uganda have been closed down --prompting Tanzanian authorities to step in and take control of one of the threatened banks, Trust Bank Tanzania. Last week Kenyan central bank governor Micah Cheserem closed Reliance Bank after it failed to repay eight local banks a total of 160-million shillings worth of overnight borrowings. Bullion Bank has had its trading suspended after suffering liquidity problems; Trust Bank Kenya has been placed under statutory management after its involvement in a court case prompted a run on its deposits; and Prudential bank was suspended on Wednesday after it failed to meet its financial obligations. Trust Bank Kenya's troubles prompted Tanzanian authorities to step in to "prevent negative spillover effects" reaching Trust Bank Kenya and the Bank of Uganda last week announced that it has closed locally-owned International Credit Bank. Both Kenya and Tanzania now fear that the banking crisis, essentially a crisis of undercapitalisation, will hit their smaller banks. Already businesses in Nairobi are refusing to accept cheques from clients banking with smaller banks. Cheserem, meanwhile, has appealed to investors to stay calm, and has advised small banks to merge, or to strengthen their capitalisation bases. New banking rules require banks to have a minimum capitalisation of 200-million shillings, these, however, only come into force on January 1 next year.