End of the road for Chase Bank as CBK announces SBM’s good bank offer

Banking regulator said the offer from SBM is non-binding and is subject to due diligence

Chase Bank

Central Bank of Kenya (CBK) has today announced it has accepted an offer to sell part of Chase Bank’s assets and liabilities to State Bank of Mauritius (SBM).

The move means that assets and liabilities of the bank which was placed under receivership in 2015 will have to split along the good bank and bad bank lines and could potentially pave the way for the Chase Bank’s eventual liquidation.

In a statement announcing the offer from SBM, CBK also said part of Chase Bank staff members will be absorbed in Mauritius bank.

“The non-binding offer includes the acquisition of certain assets and matched liabilities from Chase Bank in Receivership,” said CBK in a statement announcing the offer.

Chase Bank was placed under receivership after its auditors, Deloitte wrote a note accompanying the bank’s financial statements to CBK noting that the bank’s directors had advanced themselves over Sh13.6 billion against shareholder funds of Sh11 billion.

The contents of the auditor’s note leaked to the public on social media leading to a run on the bank forcing CBK to intervene.

In the announcement today, CBK said the offer from SBM is non-binding and is subject to due diligence and a binding contract.

“It is expected that this transaction will inter alia ensure a substantial recovery for the banks large depositors and a transfer of a substantial number of staff and branches of the existing Chase branches,” said CBK in the statement.

Small depositors will continue to have full unrestricted access to their funds.

CBK said it had met depositors at the bank who had expressed for the SBM offer.

SBM which in May 2017 acquired troubled Fidelity Bank is the third largest company listed on the Stock Exchange of Mauritius, with operations in its home country, Madagascar, India and Kenya.

SBM has a market capitalisation of approximately Sh70 billion, with the Government of Mauritius as a significant shareholder, and total assets in excess of Sh5 trillion.

“Through this potential acquisition, and combined with its other operations in Kenya, SBM will bring its experience and expertise from Mauritius and other markets, to further enhance competitiveness and the resilience of Kenya’s banking sector,” said CBK.

CBK called SBM’s offer on Chase Bank “a viable proposal for the substantial resolution of Chase Bank receivership, for the benefit of depositors and the strengthening of the Kenyan financial sector.”

“If agreed, it is expected that the proposed transaction will be concluded by the end of 2017,” said CBK.

 

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