Chase Bank used Islamic product 'to sanitise bad loans’

Chase Bank used Islamic banking product to sanitise bad loans, the Kenya Deposit Insurance Corporation (KDIC) has said. The banking sector insurer mandated by law to take over banks once they are placed under receivership, said it is considering removing the lender out of receivership after a successful rescue plan.

Chase Bank customers along Mama Ngina Street, Nairobi 07/04/16.PHOTO:BONIFACE OKENDO

“The bank suffered due to adverse publicity and insider borrowing. We recovered assets that were being sanitised out of the bank. It was nothing to do with Musharakah (an Islamic Banking product),” KDIC acting chief executive Mohamud Mohamud said at a media briefing. His revelation is contrary to what the bank’s former directors told Parliament recently.