The Central Bank of Kenya announced recently that the KCB Group had agreed to take up the majority stake in Chase Bank as part of plans to reopen the latter within a week. KCB Group’s chief executive Joshua Oigara spoke to Allan Olingo and Wallace Kantai on what the move means for the two institutions.

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KCB beat other parties that had submitted proposals to get the Chase Bank deal. How does that make you feel as a bank?

For starters, this is an expensive affair for KCB. We are not going into Chase Bank to make money. On the contrary, we are deploying the best of our resources to bring Chase Bank back to life. We got this deal because we offered the fastest approach to reopen Chase Bank. We are thinking of speed and timelines to resolve this issue.

We have no problem as KCB today if Chase Bank gets back on its feet and its shareholders take it over again. It’s a possibility. We currently don’t have a fixed solution on how this will evolve. My hope is that the bank will rebuild itself into a strong institution that could be even better than KCB.

What exactly does the transaction entail? Are you buying the bank?

We haven’t bought Chase Bank. It remains a distinct brand that has been good in the market; young and agile, very centred on customers and excellent on relationships.

Chase Bank has a unique identity, which we would like to retain. What we are coming in to do is strengthen this bank and get it back on its feet. We would like them to run the business. Ideally, we all need to respect the diversity of these brands. We do not intend to change Chase or KCB. They are different brands. Our role in the short-term as the managers is to get the bank back on its feet.

Chase Bank is reopening this week, and it is expected that there will be a run on deposits. What stop-gap measures are in place?

This is a very dynamic institution. It has continued to engage its customers. So, April 27, the day Chase Bank reopens, should not be a surprise.

We have tried engaging with them and we understand the challenges. Chase Bank is a great relationships bank. We do believe that when it reopens, we will actually get more deposits. I don’t expect a run on deposits.

The Central Bank of Kenya Governor Dr Patrick Njoroge mentioned that CBK could provide liquidity to Chase Bank through KCB. What are the terms of this provision and how is it securitised?

It’s too early to say at this stage. This facility was set up a week ago and will be available to any institution, including Chase Bank. The bank already has funds.

We can reorganise Chase Bank’s assets, which can easily be converted into liquidity in a period of 90 days. Then we can structure the facility from CBK. It’s just that we don’t have as much liquidity as we need, but as time progresses, and with the business running, this should improve.

The details provided implied that you are doing due diligence on the bank until a point where you would decide on getting the majority stake, how is that going to be?

The primary focus in the next three to six months is rebuilding the confidence in Chase Bank. This means working with the Chase Bank staff, getting customers to bank with the institution, bringing in more deposits and business. We still have the challenge of getting customer deposits that exceed $10,000, but we will be working that out.

Basically in this period, we will strive to return the brand to where it was and ensure the bank is up and running on its own. We will also network with the staff and work with them to create the value they have always believed in. This is the first priority in the first three months.

Then we will look at how the business is running, what is available. That’s a secondary conversation. My priority as KCB is to reinvest in the brand of what Chase Bank is today.

Have you looked at what Chase brings to the table in terms of filling in some of the gaps that you may have at KCB, probably on the small and medium enterprises front?

What I love about Chase is its uniqueness. It has pushed the envelope in terms of technology, innovation, and brought in new nuances when it comes to dealing with the small and medium enterprises (SMEs).

If you look at the numbers under SMEs, Chase is not the largest bank under this category. KCB has more than half-a-million clients. The likes of Co-operative Bank are big on this front.

Chase has a strong distinct culture and that is what excites us. In no way will Chase Bank become KCB and vice versa. This diversity is the value we are looking for. I am excited that two strong banks can work together to create a better outcome. The question of it’s either Chase Bank or KCB is a last century question.

How do you plan to ring-fence the fiercely loyal Chase Bank customers and also tap such dedication to a brand for KCB?

It’s just that as an industry, we are in a crisis. I have seen fiercely loyal customers across the sectors. I am proud that Chase Bank cut a niche for itself with SMEs, Islamic banking, women’s business.

When I look at the profile of this bank, its dynamism and agility is what we are looking at learning from as KCB. We don’t want one fit for all our customers and do not intend to superimpose our corporate culture on Chase. We want to defend Chase to keep its clients and culture in this transition.

You were going to go back to the shareholders with a proposal for the rights issue. Does the announcement of the impending takeover of Chase Bank by KCB change the use or even the amount you would have requested for this rights issue?

The rights issue matter is before our shareholders next week. So the answer is no. From what we see, we don’t need any additional capital to invest in new business.

We were raising this capital to finance the growth of our business, given that our annual growth right now peaks at 15-20 per cent annually, and this requires capital-raising for the next five years. In 2015, our growth in assets was about $650 million which is two-thirds of what Chase was. We will continue with our plans for the rights issue but not with Chase Bank’s acquisition in mind.

Does the government directly through Treasury or Central Bank look at KCB as an agent of stability during such times of crisis?

We haven’t had such conversation with the government. Any large bank would have played this role and that’s why there were so many proposals on Chase.

As a large lender, we need to offer hope and belief in the system. We need also to remember that banks like Chase had employees who also need stability. We want to play a role as an anchor of financial stability, through good corporate governance and collaboration with customers, stakeholders and government.