Kenya Commercial Bank has taken over a milling company owned by Mombasa tycoon Tahir Sheikh Said, also known as TSS.
The bank, Kenya's biggest by assets, said it had seized the milling firm after it defaulted on a Sh1 billion loan.
KCB, which has in excess of Sh1 billion non-performing loans with Tahir Sheikh Said (TSS) Unga Millers, issued a notice in May, indicating that it had taken over the running of the miller.
“Notice is hereby given that the above company was placed under administration by Kenya Commercial Bank Limited on May 30, 2016,” the bank said in a recent statement. “None of the directors, shareholders, employees and no other person is authorised to transact any business on behalf of the company without express written consent from the administrator.”
The businessman is said to have Sh8 billion in non-performing loans with several banks booked under other subsidiaries in his business empire.
KCB declined to comment on the matter, citing customer confidentiality but sources within the bank said that the bank would dispose of a prime piece of land in Mombasa that the billionaire had charged as security for the loan.
His fortunes, however, seem to have taken a turn for the worse after the government cancelled title deeds to large tracts of land in Lamu County that were associated with him. Some of the land is said to have been used to secure loans in excess of Sh5 billion from two banks that are listed on the stock exchange.
The businessman is known to have defaulted on at least Sh1.4 billion loans with NIC Bank and Sh300 million with National Bank.
A KCB-appointed administrator, Mr P.V.R Rao, has called on all the miller’s creditors to register with him in an effort to gauge TSS’s financial status.
By close of last week, the tycoon was yet to provide the administrator with his financial statement, prompting the call to creditors ahead of a meeting that was to be held in Mombasa on Monday.
KCB recorded a Sh7 billion jump in non-performing loans to Sh26.1 billion in March from Sh19.2 billion in December, while National Bank’s bad book shot up by Sh5.2 billion over the three months to stand at Sh16.9 billion.
NIC Bank is said to have advanced the loans to TSS late last year, and had acquired part of the loans from another listed lender.
The bank’s bad book more than doubled in the six months to March to Sh12.8 billion, from Sh6.1 billion in September.
TSS has been entangled in several court cases, most of them involving land ownership.
TSS Transporters, a passenger bus service company that plies the Nairobi-Mombasa route, and TSS service stations also fall under his empire.
In March, the National Transport and Safety Authority suspended TSS Transporters’ night operating licence over the involvement of its buses in road accidents.
The volume of bad loans in Kenya’s banking sector shot to a decade-high of Sh170 billion in the past one year due to stringent enforcement of regulations by the Central Bank of Kenya under Governor Patrick Njoroge, who took charge of the regulator in mid last year.
