As a result of the low property valuations generated by the hard economic situation, banks are resorting to repeat auctions to speed the sale of confiscated cars, real estate, and land at discounted rates.

The rising percentage of loans whose principal and interest have not been paid for at least 90 days has irritated lenders, who are now requiring auctioneers to re-post bids for confiscated property.

The surge in property auctions from a few years ago was triggered by banks’ enhanced debt collection efforts to clean up their loan books after they were slow to seize property in the aftermath of the Covid-19 economic crisis.
The ratio of gross non-performing loans (NPLs) to gross loans, which had been 13.3 percent in December of last year and had risen to 14 percent in February, according to data from the Central Bank of Kenya (CBK), reached its highest level in six months.The CBK reports a rise in NPLs in the commercial, residential, industrial, and building and construction sectors.

Some of the current auctions, according to Mr. Gachora, managing director of NCBA Group, are involving clients who have failed to start debt repayments after the Covid-19 reorganization. The reserve price for the 65-vehicle auction was Sh193.59 million.

“There are some who were given relief during Covid-19 time. And now that the relief is over, they may not be able to service the debt. But that is monitory. About 95-97 percent [of the value of loans restructured during the Covid-19 period] is performing,” said Mr Gachora.

Other major banks’ websites, such as Equity Group, KCB, Cooperative Bank, and HF Group, are being used to advertise for sale items such as cars, land, residences, and commercial and residential buildings. Banks are increasingly supplementing the auctioneer’s hammer with private contracts in which insolvent borrowers and lenders agree to negotiate the highest possible price for the sale of their properties in order to repay creditors.