Banks in Kenya hold big chunk of unclaimed assets

By James Anyanzwa

Commercial banks control the lion’s share of unclaimed assets, the ministry of Finance has revealed.

According to statistics from the Treasury, the original estimates of unclaimed assets in the entire economy stood at Sh200 billion, with financial institutions mainly enjoying such undisclosed wealth.

Treasury however reckons that reported values of these forgotten assets stands at Sh9.1 billion with commercial banks holding a massive Sh7.1 billion in unclaimed assets.

“Original estimates of these assets was Sh200 billion but reported was Sh9.1 billion with the banking sector holding Sh7.1 billion,” Dr Geoffrey Mwau, an Economic Secretary at the Treasury told Business Weekly.

 According to Treasury, the value of unclaimed assets in the Capital Markets sector stands at Sh1.5 billion, pension industry  (Sh300 million) and insurance sector (Sh230 million).

The estimated range of unclaimed assets range between Sh37 billion and Sh81 billion which excludes public trustee, official receiver, NSSF and the  National Hospital Insurance Fund, Utilities, bail and property among others.

Unclaimed financial assets are possessions that are presumed abandoned because they have remained unclaimed by the owner for a certain period of time as set by the law. These possessions are in the form of forgotten cash accounts, unpaid dividends, pensions, life assurances and investments, fixed deposits and certificates of deposit.

Possessions held

 They include among others bankers cheque amounts that have been outstanding for more than two years, bank accounts that have remained dormant for more than five years and shares where for more than three years the beneficiary has not claimed or has not communicated with the company and includes the dividends due on the shares.

 However the new law designed to deal with the mounting heap of unclaimed financial assets currently held by commercial banks, insurance firms, stockbrokers, pension funds managers and the state law office is now in force.

This follows the enactment of the Unclaimed Financial Assets Act on December 16, last year, which has compelled companies to amend their Articles of Association to allow them surrender all their unclaimed assets to a State-run fund.

According to Barclays Bank, any shareholder who has not claimed their dividends for the last three years risk their dividends and shares being surrendered to the relevant regulatory authority.

In a letter dated June 6, this year, Barclays Bank ordered its shareholders to urgently update their contact and address details with their stockbrokers and the company’s registrar and to enquire from the Barclays Registrar on whether they have any unclaimed dividends pending in their time.

 But majority of the people are yet to realise the personal and economic significance of the new law.  It is argued that locals must learn to appreciate that their hard earned lifelong assets should be well documented and preserved by being more businesslike.

  Learning not to throw away savings and assets must become a priority for every Kenyan.  Prior to enactment of the Law, financial institutions made colossal profits from thousands of depositors, a lacuna which the new law seeks to address.

 The law allows for the dealing and the reporting of unclaimed assets and establishes the Unclaimed Financial Assets Authority and the Unclaimed Financial Assets Trust Fund.

 Under the new law, all unclaimed assets would be placed in the custody of the Unclaimed Financial Assets Authority.

The board manning the Unclaimed Financial Assets Authority will be comprised of five people appointed by the minister for Finance, and the Treasury Permanent Secretary and a chief executive officer.

Trust fund

 The new law also proposes establishment of the Unclaimed Financial Assets Trust Fund, into which all monies that become, or are deemed to be unclaimed assets, are paid into.

The Government will therefore seize billions of shillings in assets that financial institutions have been sitting on after their owners either passed away or failed to claim.

 The need for such a law has been occasioned by colossal sums of money represented as unclaimed assets held by financial and other institutions in Kenya. 

The list of what is defined as unclaimed financial assets in the law includes travellers’ cheques, money orders, cheques, drafts, demand and savings or matured time deposits with a bank or financial institution. 

Other financial assets include life or endowment insurance policies or annuity contracts, deposit for utility services, ownership of any shares, stocks, or ownership interest in a business. 

The list of other financial assets to be covered under this proposed law include assets from dissolved business entity, assets held in fiduciary capacity, or in safe deposit box or repository, as well as assets held by Court or government department.

 Unpaid wages, including wages, represented by unpresented payroll cheques, allowances, bonuses and terminal benefits that remained unclaimed by the owner for more than one year after becoming payable will also be presumed abandoned.

 The unclaimed Financial Assets law relates to financial assets considered dormant, unclaimed and abandoned when contact with the owner or his heirs and personal representatives is lost over an extended period.