The Central Bank of Kenya (CBK) has issued a go ahead for the liquidation of Chase Bank Kenya Limited.
CBK said that liquidation of the lender that has been under receivership from April 2016 is for the good of depositors, creditors, and the wider public interest.
On April 7, 2016, the Central Bank of Kenya appointed tl1e Kenya Deposit Insurance Corporation (KDIC) as receiver for Chase base Bank Limited pursuant to the provisions of Sections 43 ( I ), 43(2) and 53 (1)of the Kenya Deposit Insurance Ac 2012.
The lender had been placed under receivership with KCB having been appointed as Manager of Chase Bank Limited (CBLR).
“With the concurrence and approval of CBK, this was intended to ensure the continued operations of CBLIR, leveraging on KCB” s credentials as a strong bank with a solid brand, adequate human resources, and wide experience in the country. Consequently, CBLIR resumed limited ban king operations in accordance with the Banking Act on April 27, 2016, under KCB’s management. This enabled CBLIR customers to have immediate access to their deposits to a minimum of Ksh.1 million.” Read a statement from CBK
The move enabled, 162,970 deposit accounts equivalent to 97 percent of the deposi tors’ accessed their funds in full.
On August 17, 2018, 75 percent of the value of deposits at CBL!R and 75 percent t of the value of assets were carved out removed and transferred to SBM Bank Kenya Limited (SBM Bank), a subsidiary of SBM Holdings Limited.
This followed a transparent Expression of interest process. The transaction enabled CBLIR depositors to access a significant po1tion of their frozen deposits. Following the carve out and transfer, KCB’s management contract ended and KDIC continued managing the remaining 25 percent of the value of deposits along v. the otl1er assets and liabilities that remained in CBLIR.
Chronology of events
- In September 2018, following the carve out and transfer to SBM Bank, CBK required KDIC to appoiJ1t an independent external auditor to carry out a comprebensive audit of CBLIR based on te1ms of reference approved by CBK, pursuant to Section 24 of the Banking Act and to provide additional basis for further actions. KDIC contracted the independent external auditor in December 2019.
- The e:-. ernal auditor submitted the audit report to CBK in September 2020. CBK noted a number of gaps in the report and engaged KCB and KDIC. A significant num ber of the gaps were subseq uenlly resolved. In February 2021, CBK requested KDIC to resolve all the pendi ng gaps in 60 days.
- On April 7, 2021, KDIC submitted the Recei ver’s Report to CBK recommending that CBLIR be liquidated. The report indicates that considering the weak status of CBLIR’s financial position, liquidation is the only feasible option.
- CBK has assessed the recommendation by KDIC, and considered that liquidation would facilitate the orderly resolution of the residual assets and liabilities of CBLIR in accordance with the Laws of Kenya, to protect the interest of CBLIR depositors, its creditors, and the wider public interest.
- Subsequently, CBK bas today, April 16, 2021 appointed tile KDIC as liquidator of CBLIR in tem1s of Sections 53(2) and 54(1Xa) of the Kenya Deposit Insurance Act, 2012.