The Central Bank of Kenya (CBK) has approved the liquidation of Charterhouse Bank Limited (CHB).
In a statement issued on Friday, CBK said it had subsequently appointed the Kenya Deposit Insurance Corporation (KDIC) as a liquidator of Charterhouse Bank, which is the second bank to be placed under liquidation in three weeks.
“CBK has assessed the recommendation and considered that liquidation would facilitate the orderly resolution of the assets and liabilities of CHB in accordance with the Laws of Kenya, to protect the interest of CHB depositors, its creditors, other stakeholders and the wider Public interest,” reads the statement.
CBK further said KDIC will release details about the liquidation and payment of depositors in due course.
On June, 2006, the regulator placed CHB under statutory management following severe violations of the Banking Act by CHB relating to lending, accuracy of returns submitted to CBK, and failure to obtain account opening documentation for a number of customers.
The troubled bank was established in 1996 and taking over the operations of Middle East Kenya Finance Limited, before converting to a fully-fledged bank in 1998. The bank had 10 branches in Nairobi, Kisumu and Mombasa. Eight of the branches were located at branches of Nakumatt Supermarket stores.
By 2006, CHB was classified as a small bank, ranked 30 out of 41 banks with an asset base of KSh. 4 billion and a market share of 0.55 percent.
It was during that year 2006 that the then Mandera Central Member of Parliament, Billow Kerrow exposed the results of a leaked task force investigation conducted into CHB. The MP publicly linked Nakumatt Holdings and Charter House Bank to money laundering and tax evasion, alleging also that the supermarket company held a 10 percent stake in the bank.
A Central Bank of Kenya inspection later found that the bank had lent both Nakumatt Holdings Limited and Triton Petroleum Limited (Both of which have since collapsed) in excess of the single borrower limit of 25 per cent of its core capital, forcing the CBK to place Charterhouse Bank under statutory management on June 23rd, 2006.
The collapse of Charterhouse Bank unravelled as one of the largest money laundering scheme that roped in a string of companies including Nakumatt and Triton Petroleum Limited.
