Mauritian lender SBM Holdings has formally taken over troubled Chase Bank following the conclusion of a sale deal.
The Central Bank of Kenya (CBK) and the Kenya Deposit Insurance Corporation (KDIC) said Tuesday they had concluded the signing of the acquisition deal with the lender and SBM group earlier announced early this year.
“This concludes the discussions between SBM, KDIC and CBK on the CBLR transaction that was announced on January 5, 2018,” said CBK and KDIC in a joint statement.
The formal takeover of Chase Bank provides a glimpse of hope for Chase Bank depositors including companies that have deposits running into billions of shillings locked in the troubled lender that they could finally access their money after a lengthy and painful wait.
No concrete timelines
However the CBK and KDIC did not provide any concrete timelines for release of the money in their statement.
“The date these deposits will be available, and the details under which the customer accounts will be managed, will be announced shortly,” said CBK and KDIC in their statement.
Chase Bank customers will access 75 per cent of the Ksh76 billion ($757 million) deposits locked in the troubled lender in staggered phases over a period of three years.
25 per cent or about Ksh19 billion ($189.2 million) will therefore remain as part of other “assets and liabilities” with Chase Bank.
This means that customers will not have access to all their funds until CBK successfully seeks prosecution of the bank’s managers and owners who are implicated in the bank’s woes to attach their assets and borrowers who stopped paying after it was put under receivership, CBK governor Patrick Njoroge had said earlier.
About 3,100 affected depositors are affected.
Under the staggered approach, 18.75 per cent of the deposits will be placed in current accounts at SBM operated by depositors.
Another 18.75 per cent will be placed in savings accounts of the depositors earning 7 per cent interest.
The rest of the 37.75 per cent will be available annually in term deposits over a three year period earning interest of 7 per cent.
Betting firm SportPesa, investment company Centum , State-owned Kenya Ports Authority (KPA), the Kenya Tea Development Agency (KTDA), United Nations Sacco, and South Africa’s hotel group City Lodge are among the institutions with large sums held at Chase Bank after it was placed under receivership.
Others are Co-operative Bank of Kenya and Rafiki Microfinance Bank, a subsidiary of Chase Bank.
Run on deposits
The Law Society of Kenya (LSK) and thousands of small and medium enterprises also have money in the bank.
Chase Bank was placed under receivership on April 7, 2016 following a run on deposits after reports of liquidity problems spread online.
It was re-opened on April 27, 2016 under the management of the Kenya Deposit Insurance Corporation (KDIC).
As part of the deal, Mauritius’ second-largest lender will absorb Chase Bank’s staff estimated at 1,300 in about 62 of its branches.