Category Archives: receiverships

Chase Bank Depositors updated on SBM Deal

Yesterday, officials from the Central Bank (CBK) and the Kenya Deposit Insurance Corporation (KDIC) met depositors of Chase Bank too outline the way forward following the offer deal between the State Bank of Mauritius (SBM) and the CBK for the acquisition of selected assets and liabilities of Chase Bank that is still in receivership.

Peter Nduati, the founder and CEO of the Resolution Group, and a Chase Bank customer tweeted some highlights from the Nairobi meeting.

  • At the #Chasebank depositors meeting. CBK Governor briefing on the back story.
  • SBM will take a maximum of Staff and Branches. There is no compulsion on the part of the staff to move.
  • Moratorium deposits will have 75% of the money move to SBM out of which 50% will have ready access in a current account whilst the balance remains at 7% interest
  • CBK says operationalization is a matter of weeks as far as depositors are concerned. Loans may take 2 months.

  • To paraphrase, we will lose 25% of the deposit but will get 37.5% immediately. 37.5% will be availed in 3 annual tranches with a 7% interest.
  • Its a better position for depositors but not optimum. At least 37.5% will be available and the balance will be in a term deposit earning interest.
  •  For a collapsed bank, I guess it’s the best deal. We have waited almost two years.
  • Non-moratorium depositors move to SBM.
  • I haven’t seen him (Zaf) or Duncan since 2016. Are they here even?

Kenatco Receivership Assets

From a Kenyan magazine issue – The Weekly Review in September 1985.
The Receiver & Manager of Kenatco offered for sale the business and assets of the two businesses – haulage and taxis, either together or separately as going concerns. This meant the businesses were operating, and receiver/managers are usually appointed by financial institutions to take over what they see as struggling businesses that are having trouble paying their bank debts, but which could be turned around with better management. Banks do this before the businesses shut down completely. The Kenatco businesses were: 
  • Haulage Comprising: 85 haulage trucks of various makes including Mack, Fiat, Mercedes, Leyland, and Volvo and 90 trailers of various makes including Vibert, York, and Miller.
  • Taxis: comprising 79 Mercedes-Benz 200 Saloon Car Taxis – petrol and diesel-powered.
  • The two businesses shared land including two leasehold plots – at Likoni Road, Nairobi (5.9 acres) and Changamwe Industrial Area, Mombasa (7.9 acres). Also on sale were service & administration vehicles, workshop plant & equipment as well as office furniture &  equipment.

A document giving full particulars of the business and assets for sale was made available and could be obtained at a cost of Kshs 300/ – (refundable in the event of a successful purchase of the assets) from J .K. Muiruri, Joint Receiver and Manager, Kenatco Transport Company, Ltd., Alico House, P.O. Box 44286, NAIROBI Tel. 721833. 

Offers were to reach the Receivers and Managers by 30th November 1985, and conditions were that the Receivers and Managers did not bind themselves to accept the highest or any tender for the businesses, and offers for individual assets would not be entertained.

A separate notice was also issued for the sale of other assets of Kenatco – which were surplus vehicles, equipment and scrap items that were not part of the “going concern” sale. The assets were located in two towns with offers due on October 19, 1985, and the receivers & managers described them as:
Nairobi (Likoni Road)
  • Administration Vehicles:  6 Peugeot 404 pickup escort vans (1979/1981), Mazda 929 KVV 404,  (1980), 2 Toyota Carinas – KRB150/KRB151 (1977), Peugeot 104 AB38ll (1979).
  • The scrap items included 395 tyres, 117 scrap iron sheets, 56 batteries, 24 fibre glass fuel tanks, 2 safes, 2 steel fuel tanks, 13 tarpaulins and 19 empty oil drums.
  • Spare parts for Chevrolet, Datsun, Land Rover, Volkswagen, Toyota, Renault, and Mercedes vehicles. 
Mombasa:  (Changamwe)
  • 2 Peugeot 404 pickup escort vans, Toyota Carina KRA 910 (1977), Mercedes-Benz 200D KPL 251,
  • Yamaha motorcycle 100cc KTD 207 (1979), Boss forklift KND 686.
  • The scrap items included 468 tyres, 141 batteries (1979), 48 oil drums and 7 tonnes scrap metal (1973).

Other Kenatco articles:

  • Excerpt about the company: KENATCO, a cooperative with 9,000 members was very successful with profitable routes to Zambia, Angola, and Rhodesia until East African problems led to them not being allowed to carry heavy vehicle freight through Tanzania, and that government’s detention of one-third of their fleet. 
  • This article gives the background and history of Kenatco. The Kenya National Transport Co-operative Society, as it was named in 1965, was the first transport business society in Kenya…The Kenatco pioneers had a big dream. So big, that they not only wanted to go into the haulage business, but also to buy some tourism boats and a plane to serve the local tourism market.
  • See the Hansard from Kenya’s parliament on 26 November 2008 that describes how the Kenatco receivership came about. 
  • Kenatco is still under receivership. In 2016, Receiver Manager John Ndung’u said that finance costs are driving the company into losses, even though it has been making an operating profit since 2002.
  • Kenatco still exists as a Kenatco Taxis Ltd. a fully fledged government parastatal wholly owned by ICDC. It is Kenya’s leading, most reliable value-for-money taxi company, with a clean and modern fleet, efficient back-office infrastructure, on-the-road back up services, for that comfortable and safe drive, pick up and drop off at whichever location within Kenya.

Tanzania closes 5 banks

In notices released today, the Bank of Tanzania (BoT) revoked the licenses and directed that five banks proceed to compulsory liquidation, by the country’s  Deposit Insurance Board (DIB).

BOT found that the banks – Covenant Bank For Women {Tanzania}, Efatha Bank, Njombe Community Bank, Kagera Farmers Cooperative Bank and Meru Community Bank were found to be critically undercapitalized and that their continued operations would be detrimental to depositors and a risk to the stability of the financial system.

In another notice, depositors, creditors, and debtors of the five banks were asked to be patient as the liquidator (DIB) makes arrangements, collect debts, and works out a payout plan.

 

Nakumatt Voluntary Administration

Troubled supermarket chain Nakumatt applied for voluntary administration to enable the chain to continue operations while freezing a mounting series of claims from banks, mall landlords, suppliers and other creditors as they seek options on how best to survive.

Nakumatt in administration

The move effectively ends the management of Atul Shah and surrenders  decision-making at Nakumatt to Peter Kahi of PKF Consulting. One of the first orders of business of the company in administration will be for Kahi to draw and publish a statement of Nakumatt’s assets and debts while separating bank ones, preferential creditors, unsecured creditors, and connected creditors. Up to now, the true and total debt has been a matter of speculation that could be up to Kshs 30-40 billion.

The Nakumatt statement reads that “the senior lenders are aware of Nakumatt’s financial position and are supportive of Nakumatt’s application for an administration order.  Further, Tusker Mattresses Limited has, subject to the Competition Authority of Kenya’s approval, undertaken to forge ahead with its investment in Nakumatt in connection with its proposed merger with Nakumatt.”

Past funding proposals prior to the Tuskys deal under consideration have not materialized. The insolvency law, which Nakumatt cites in its application for administration is among a series of new corporate laws passed in 2015 and is now focused on bringing troubled companies back to life. Aspects of the laws have been used at distressed companies including Uchumi and Kenya Airways.  Going into administration lowers the voting powers of banks, who are secured, and it gives Nakumatt power to deal with the unsecured debts.  The banks themselves were legally prevented from appointing an administrator as there have already been cases filed by some creditors asking for the liquidation of Nakumatt.

SBM Offer for Chase Bank

Update: Jan 5 2018 

Central Bank of Kenya (CBK) and Kenya Deposit Insurance Corporation (KDIC) announce the receipt and acceptance of a Binding Offer from SBM Holdings Limited (SBM) with respect to Chase Bank (Kenya) Limited (In Receivership) (CBLR).

The offer still needs to be executed and operationalised, and it is expected that this transaction will inter alia ensure the transfer of 75 percent of the value of deposits currently under moratorium and the transfer of staff and branches of the existing CBLR operations. Non-moratorium depositors will continue to have full unrestricted access to their funds.

Original: October 11 2017 – On Monday, October 9, the Central Bank of Kenya (CBK) issued a statement about their receipt of a non-binding offer from the SBM Holdings (State Bank of Mauritius – SBM) for parts of Chase Bank.

It came after another meeting last Friday to update Chase Bank depositors about the progress of the expression of interest (EOI) with depositors, and which was then followed by some news articles that prompted some alarm over the ‘loss’ of deposits at Chase from the SBM takeover.

The statement mentions SBM’s offer to acquire some assets (i.e. loans) that are matched (i.e. equal) to some liabilities (i.e. customer deposits at Chase)  and went ahead to mention that there would be a substantial recovery of deposits and retention of staff and branches of Chase Bank.

The bank, which was expected to be a quick receivership, and concluded in April this year, now has a hole of Kshs 35 billion and the estimate is that SBM will support the recovery of 75% of the deposits as at when Chase Bank was closed in April 2016. One third of the funds will be available on January 1, another third will be available in a savings account that will earn interest (it was a sore point for depositors to hear that their funds in the bank that was known for great rates had not been earning interest since it was closed in April 2016), and a third will be available in installments over the next three years.

The final amount will be recovered by suits and fraud cases against the defaulters who may include directors and managers (insiders) at the bank.

While CBK had earlier reported that 12 banks had replied to the EOI (three Kenyan banks, four foreign banks, and five financial consortiums), the standard quotes the CBK Governor, Dr. Patrick Njoroge, as saying “All the investors in the end indicated that they were not interested in taking up the bank, save for one who was only interested in carving out some assets and liabilities and not an entire acquisition.

SBM has a substantial Government of Mauritius shareholding, and this will be the second bank that SBM is buying in Kenya, after they took over Fidelity Bank and one story is that their rescue of  Fidelity was tied to some assurance that they would also get Chase, ahead of other bidders.

SBM will do due diligence on what branches and staff it wants to retain going forward. The Chase recovery seems similar to one that Imperial Bank shareholders had initially proposed when they found a hole at their bank – one of staggered access to funding, immediate, then some spaced over three years.