Audit declares Postbank technically insolvent
Auditor General Nancy Gathungu has warned that Kenya Post Office Savings Bank (Postbank) is technically insolvent due to low liquidity ratio at the firm.
Reports indicate the bank is not in a position to support itself unless the government assists it to manage fixed costs.
The declaration by the office of the Auditor General comes from the financial statement of the bank as at December 31 2019 which shows that customers savings and deposits of Sh21.8 million exceeds the total assets of the bank of Sh14.5 million by Sh7.3 million.
Negative equity
“The bank continued to record a negative shareholders equity of Sh10,606,330,664 (2018 Sh9,192,821,813). The bank’s dependency on the government to defray these losses is uncertain and the bank’s ability to continue as a going concern is doubtful,” reads the report.
In a report tabled at the National Assembly, Gathungu also revealed that the bank lost Sh81.13 million through fraud yet no efforts had been undertaken by the management of the bank to recover the money so far. Gathungu fingered anomalies in the employees’ income expenses of Sh1.2 billion, which is approximately 53 per cent of the total expenditure of the bank for the year under review. The expenditure is above the set limit of 35 per cent as stipulated in Regulation 26 (a) of the Public Finance Management (PFM) Regulations of 2015. Gathungu also warned the bank risks losing a Sh550 million land which is at the centre of the ownership dispute in the city’s Upper hill area.
