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Faulu Bank shuts branches in Meru, Kirinyaga and Taita Taveta

Faulu Microfinance Bank

Faulu Microfinance Bank is shutting four branches in Nakuru, Taita Taveta, Meru, and Kirinyaga under a consolidation drive that will see it save on rental costs.

The micro-lender announced the Central Bank of Kenya (CBK) had approved its application to consolidate some of its branches and marketing offices.

The trimming of branch count is expected to significantly reduce rent expenditure as customers are pushed to digital platforms such as mobile banking.

“Taveta and Njoro offices shall cease operations with effect from close of business July 31 while operations for Mwea and Maua branches shall cease from October 31,” read a notice by Faulu.

It was not immediately clear if the closure of the four branches will result to job losses as has been witnessed in other financial service institutions that have taken this route.

In July last year, the NCBA Group shut 14 of its branches in Kenya on reduced business due to Covid-19 and later announced job cuts in November.

The lender grew to become the third-largest bank by assets in Kenya after the merger in 2019 of NIC and CBA banks.

Kenya’s largest bank by assets KCB Group in 2019 acquired the capital-starved National Bank of Kenya and later laid off 112 employees.

Other lenders where staff layoffs occurred after mergers or acquisitions include StanChart and Absa.

The Faulu consolidation will include the merging of its Njoro marketing office with Nakuru branch and the Taita Taveta marketing office with Voi branch.

Faulu Mwea will be merged with the Embu branch and the Maua outlet with Meru branch.

The micro-lender asked customers to use alternative banking channels including Faulu agents, Visa debit card and mobile banking.

The CBK in December revealed that the Kenya micro-lenders had suffered a Sh1 billion loss in the year to June during a period when financial institutions were forced to set aside higher provisions for defaulted loans and restructured over Sh1.12 trillion.

Unlike banks, most microfinance banks serve a large and vulnerable client base and have small balance sheets therefore lack the capacity to absorb huge losses or restructure loans.

Written by miniBloggersKe

NairobiminiBloggers Believes in philanthropists, and we have a Keen interest in Political, Leadership, and Governance. We will tell you what they don't want you to know.

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