Category Archives: SBM

Bank Rankings 2018 Part II: New Entrants

Following an earlier ranking of the top banks based on their asset size at the beginning of the year, what are Kenya’s top banks likely to be, nominally based on asset size at the end of the year? In 2018, Interest rate caps and IFRS9 have had an impact on bank performance while the departures of Imperial and Chase banks were announced.

Ranking using September 2018 numbers 

1. KCB Group – Kenya bank assets of Kshs 594 billion assets (and group assets of Kshs 684 billion).

2. Equity – Kenya bank assets of Kshs 424 billion (and group assets of Kshs 560 billion).

* 3 CBA/NIC – combined assets of Kshs 425 billion (as at September 2018) – if an announced merger deal is approved and completed. CBA and NIC are ranked 9 and 10 by assets, and will leap-frog Cooperative Bank, Barclays Kenya, Diamond Trust, Standard Chartered Kenya, Stanbic and Investment & Mortgages (I&M) banks.

4. Co-op Bank Kenya – asses of Kshs 398 billion.

Other new and interesting bank changes this year; 

12.  State-owned National Bank is in search of a shareholder deal to boost capital.

15.  SBM Kenya. The State Bank of Mauritius completed a carve-out and rebranding of assets, staff, branches and customers of Chase Bank in August. For the third quarter of 2018, it reported assets of Kshs 75.5 billion up from 11.7 billion in January 2018. It now has customer loans of Kshs 12.4 billion, customer deposits of Kshs 53.6 billion, and government securities of Kshs 34.8 billion. SBM entered Kenya two years ago by taking over Fidelity Bank that had assets of Kshs 15 billion in 2015 for just $1. KCB also is expected to conclude a takeover deal for collapsed Imperial Bank in 2019.

39. Mayfair Bank was licensed to operate in June 2017 and began operations later in August. Mayfair now has Kshs 5.3 billion in assets and operates three branches in Nairobi and Mombasa.

41 Dubai Islamic Bank – Kenya (DIB Kenya) with Kshs 4.1 billion in assets was licensed in April 2017. It, is the third Shariah-only bank in Kenya, after Gulf African (No. 23 with Kshs 32 billion of assets) and First Community (No. 31 with Kshs 16 billion assets). DIB Kenya is a fully-owned subsidiary of Dubai Islamic Bank which is one of the largest Islamic banks in the world.

$1 = Kshs 102.

Chase Bank Reopens as SBM Kenya

Monday saw the conclusion of the receivership of Chase Bank as SBM Kenya, part of a Mauritius financial group, completed a carve out of assets, staff and branches of Chase Bank that was overseen by the Central Bank of Kenya and the Kenya Deposit Insurance Corporation.

CBK Governor Patrick Njoroge said this was a historic event in Africa, not just in Kenya, as previously when banks were shut down, they stayed closed – but that since Chase closed and was reopened in April 2016, 97% of its depositors had been paid in full, and the remaining (large) depositors could now get structured access to 75% of their deposits through SBM (including 50% of their deposits immediately) over a three-year period during which they will earn interest.

He said this had been accomplished as a private sector-led initiative, supported by KCB, and that the process had been transparent throughout, with a unique EOI (expression of interest), done to maximise value for depositors and stakeholders. He added the remaining 25% of the assets would remain with Chase Bank (in receivership) and that CBK and KDIC would continue working to pursue the full recovery of the assets that were illegally taken from Chase Bank.

Kee Chong Li Kwong Wing, Chairman of SBM Holdings, said that they would work with local staff and management of the bank, first to get it back to $1.5 billion assets it was before the closure and then to double in size in 3 to 5 years. He said the vision was for SBM Bank Kenya to have its own local investors, board and management and eventually be listed on the Nairobi Securities Exchange. He added that the model of managing overseas subsidiaries by remote control had not worked in Mozambique and Zimbabwe and that they would not repeat that in Kenya which had potential to be a key partner with Mauritius.

SBM Kenya now moves from being a Tier III to Tier II bank as SBM will also invest an additional $60 million (Ksh 6 billion) for the bank’s growth, taking its investments in Kenya to $86 million. The bank has taken on and rebranded 50 of 62 previous Chase branches and absorbed 825 staff into SBM Kenya.

SBM takes Chase Bank deposits to conclude speedy receivership

EDIT August 24 via SBM Bank Kenya: If you have been transacting with the bank in the last 60 days, you have 6 months to update your documentation #KYC.

 

EDIT August 15 2018:  As part of the transition of Chase to SBM, cheques and EFT’s will be temporarily halted from Thursday 16th August to resume at new SBM counters on Monday, August 20, 2018. Also, it appears, Chase Bank customers will be required to fill out new account opening forms for personal & corporate accounts, wire transfers, chequebooks, cards (debit & credit) and to access digital banking services. This is in line with “know your customer” and to condemn the identity, authenticity and validity of Chase customers being integrated into SBM.

Chase debit /ATM cards cease to work on Friday, August 17 and customers have been asked to collect new SBM cards from their “home” branches. Chase Bank chequebooks also cease effect on that date and customers will be issued with new SBM Kenya chequebooks, with the first being free of charge). Users of the popular Chase Bank Mfukoni app will be prompted to update it and to download a new SBM Kenya app – which has familiar features including airtime purchase, utility bill payments, account statements, chequebook requests and Mobile2bank / M-Pesa transfers of up to Kshs 500,000 ($5,000).

April 18 2018: Yesterday an agreement was signed to conclude the transfer of 75% of the deposits held in Chase Bank that was placed under receivership in April 2016, to the State Bank of Mauritius (operating as SBM Kenya), with the balance remaining at Chase (in receivership) that is being managed by the Central Bank of Kenya (CBK) and the Kenya Deposit Insurance Corporation (KDIC).

The agreement enables customers of Chase Bank to immediately access 25% of their deposits that will be placed in current accounts at SBM, and another 25% that will be placed at savings account at SBM that will earn 6.65% interest per annum. The balance of funds being transferred from Chase will be placed in fixed deposits at SBM that mature over three years with one-third becoming available to Chase depositors on the anniversary date of the agreement for each of the next three years, in what CBK states this represents a substantial resolution of for the depositors of Chase Bank.

SBM Kenya is part of SBM Holdings that is controlled by the Government of Mauritius and has $5.8 billion assets and is the third largest company on the Mauritius stock exchange with a market capitalization of $680 million.

EDIT; July 6: CBK announced that SBM has commenced the acquisition of certain assets and assumption of certain liabilities of Chase Bank in line with the announcement of April 17, 2018, and following approval from the CBK on June 13, and the Kenya’s Cabinet Secretary, National Treasury on June 28, with a goal to complete the  acquisition and assumption process on August 17, 2018.

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?

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.