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KCB 'still interested' in Chase Bank stake

Thursday August 04 2016

The KCB Group has said it is still interested in becoming a shareholder of Kenyan lender Chase Bank which it has been managing so long as the process is above board.

KCB had earlier Thursday said it would hand over the troubled bank to a new investor in the next two months, comments which were taken to mean it had opted out of its arrangement with Kenya Deposit Insurance Corporation (KDIC) to acquire a majority stake in the bank subject to due diligence.

“We remain an interested party but we want a process that is transparent, independent and above board,” the Group's chief executive Joshua Oigara said.

Chase Bank was put under receivership in April after the management under-reported insider loans by a massive Ksh8 billion ($77.51 million) triggering a run on deposits.

During a Press briefing on the KCB's half-year results, Mr Oigara said KCB was making a gradual exit from Chase Bank through a process which will be completed in September.

“We have done our job and we have returned Chase Bank where it is supposed to be. The bank will be handed over by KDIC to the selected investors by September or October,” he said.

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KCB had struck a deal with Central Bank and the KDIC to take over the management of Chase Bank in order to reorganise the bank, pay off depositors by up to Ksh1 million ($9,689.92) and carry out a due diligence on the bank to fast-track its possibility of acquiring a majority stake.

Rise in H1 profit

Mr Oigara was speaking during the release of its half-year results which showed a 14 per cent rise on the back of by a strong performance by the Kenyan market.

KCB Group’s net profit for the six months to June 30, 2016 grew to Ksh10.5 billion ($101.74 million) from Ksh9.24 billion ($89.53 million) in the same period last year.

Gross non-performing loans (NPLs) and advances increased to Ksh32.97 billion ($319.47 million) from Ksh24.18 billion ($234.3 million) largely due to construction and government related accounts as the Kenyan government delayed in paying off contractors and suppliers.

Kenyan operations accounted for 93.6 per cent of the profit while regional subsidiaries contributions included Tanzania (1.3 per cent), Rwanda (0.8 per cent), South Sudan (4 per cent), and Burundi (0.2 per cent).

Ugandan subsidiary did not make profit.

*Story updated.

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