The Central Bank of Kenya (CBK) has approved the liquidation of Chase Bank.
This means the lender’s assets will be sold off to pay any existing debts.
Following its liquidation, the CBK appointed Kenya Deposit Insurance Corporation (KDIC) as the liquidator after it presented the receiver’s report.
“CBK has assessed the recommendations 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 interests of CBLIR depositors, its creditors and the wider public interest,,” said the CBK in a statement.
However, to ensure continued operations of the bank, KDIC appointed KCB as manager of the bank that allowed 97 percent of its customers to have full access to their deposit accounts.
Following a curve out and transfer to SBM Bank, CBK noted a number of gaps in an external audit on the bank.
According to the receiver’s report by KDIC, the decision to liquidate the troubled lender was the only feasible option due to the bank’s weak financial position.
Chase Bank was first placed under on April 7, 2016, a decision the CBK said was meant to protect the general public after cases of misreported loans ans deposit run emerged.
The decision to place the bank under receivership came a day after the appointment of Muthoni Kuria as the new board chairperson after the then long-serving Chairman Zafrullah Khan together with Group Managing Director Duncan Kabui. Resigned.
According to CBK, Chase Bank was not able to meet its financial obligations on April 6, 2016.
“One of CBK’s primary role as a regulator is to foster the liquidity, solvency and proper functioning of a stable market-based financial system. Chase Bank Limited experienced liquidity difficulties, following inaccurate social media reports and the stepping aside of two of its directors,” it said.
Mr. Kabui stepped aside following the publication of the 2015 financial statements which reveal a significant jump of its non-performing loans from Sh3 billion to Sh11 billion.
CBK said more information on the liquidation and payment of depositors will be released at a later date.
