Category Archives: Chase Bank

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.

Chase and Imperial Banks receivership updates

The last week of June was quite eventful for Chase and Imperial – two banks in receivership in Kenya.

First, former Chase Bank Chairman Zafrullah Khan was hauled before a court. He was charged with committing a Kshs 1.7 billion fraud at the bank and was then freed on bond after two nights in jail so he could travel to the US for medical treatment.

Mr Khan had appeared before Senior Principal Magistrate Martha Mutuku where he was charged with conspiring to defraud Chase Bank of nearly Sh1.7 billion besides three counts of stealing…
The court heard that Mr Khan had committed the offence of conspiring to defraud Chase Bank Sh1,683,000,000 by falsely pretending that the money had been disbursed to accounts of Carmelia Investments Limited, Cleopatra Holdings, Golden Azure Limited and Colnbrook Holdings as genuine loan facilities.

There were reports that seven other officials of the bank were being sought, but so far only Khan was charged.

On the same day that Khan was in court, Imperial Bank depositors had a meeting with the Governor of the Central Bank. It was quite a long session, after which they surprisingly endorsed support for the new turnaround plan at Imperial that was revealed last week. The despises of Chase have a had a long receivership period, and many of their large depositors still have not got the bulk of their savings and funds from the bank in the 21 months since the bank closed.

Kenya Bank Receivership Updates: June 2017

Chase Bank: The Business Daily has unveiled the results of the bidding for Chase Bank in an ongoing receivership exit process that has been organized by the Central Bank of Kenya (CBK) .. “France’s third-largest bank by assets, Societe Generale, and Mauritius-based SBM Holdings are the frontrunners to acquire troubled Chase Bank and its subsidiary, Rafiki Microfinance.. The two have emerged top of the list of investors, including KCB Group, I&M Bank, Stanbic Bank and South Africa’s First Rand, who had expressed interest in taking over the Kenyan lender.”

Dubai Bank: The bank is in liquidation and the Kenya Deposit Insurance Corporation is calling on all depositors and creditors of the bank to show up and file their claims. During the court process, before liquidation, few depositors showed up after bad debts stalled the closed bank.

Imperial Bank: A court has just granted a 90-day extension of the receivership. It is “without prejudice” which means that the extension does not imply an endorsement of any the ongoing discussions between the shareholders of the bank, the CBK, and the KDIC. The statement ends with “a tentative timeline will be issued in the coming days.”

Coop Bank 2017 AGM

Cooperative Bank (Coop Bank) shareholders had their 2017 AGM in Nairobi where the directors proposed a Kshs 0.8 per share dividend as well as a bonus share for every five held.

At the AGM, their CEO, G. Muriuki, spoke of continuing the turnaround at the bank which had a Kshs 2.3 billion loss in 2001 when they had 100,000 customers – and on through 2016 when they had Kshs 353 billion of assets, Kshs 18 billion profits, 149 branches, and  6.2 million customers. The cooperative sector remains the heart and identity of the bank, and they will continue to provide services to the sector.  The cooperative movement also forms the anchor shareholding of Coop Bank with a 65% stake.

Most amazing, he said, was the digital transformation at the bank. Some years back, McKinsey had identified 60 services done at their branch that could be decentralized – and now, only 15% of transactions are done at the branch – with customers doing the bulk of transactions on mobile phones, at ATM’s, agents, and on the internet – and this had seen the Bank’s cost/income ratio reduce from 60% to 50%

At the AGM, there was also discussion on some challenges such as court cases & loan provisions, funds at held Chase Bank and hyperinflation in South Sudan which has resulted in losses. Some shareholders also asked if they could have the annual report mailed to them via post offices and also had other queries on issues like diaspora banking services, staff fraud, PesaLink, interim dividends, the bank’s share price, transport fare to attend the AGM, cyber crimes, and interest rate caps. In answering one question, the CEO said Cooperative Bank was not one of the bidders for Chase Bank as they had a presence similar to Chase and would focus on growing organically.

The  CEO also said this year marked the third bonus share issue since the bank had listed in 2008, and this was good for shareholders as the bank had grown its capital without asking shareholders to put in more money.  Coop Bank had a livestream of the AGM for any shareholders who were unable to attend the AGM, and more companies should do this for investors awareness

Caritas MFI Bank Launched

Thursday saw the official launch of the Caritas Microfinance (MFI) Bank in Nairobi. Caritas MFB,  which is owned by the Catholic Archdiocese of Nairobi, was licensed by the Central Bank of Kenya in June 2015. It has since mobilized almost Kshs 400 million in deposits and advanced Kshs 250 million of loans.

Caritas plans to go from having two branches, now serving 10,000 customers, to five by year-end and increase its authorized agent network from 16 to 50. Already 70% transactions are done using mobile banking and through a partnership with Cooperative Bank, Caritas customers can use Coop Bank ATM’s and visa cards for purchases and this will enable another potential 100,000 “unbanked and under-banked” members of 200 self-help groups in Nairobi and Kiambu counties to access formal banking services.

MFI’s were excluded from the interest cap law of 2016. Other deposit-taking microfinance bank institutions include Choice, Daraja, Ideal (formerly REMU), Maisha, SMEP, Sumac, U&I, and Uwezo. Larger ones include KWFT and Faulu  as well as the Chase Bank-owned Rafiki MFI that was quite large and growing fast. It is independent of Chase Bank but a lot of its future growth is dependent on the outcome of the Chase receivership.