New court case to delay Chase Bank resolution

Chase Bank customers view a notice pinned on the entrance of the lender’s River Road branch in Nairobi when the bank was placed under receivership last year. [Willis Awandu, Standard]

Chase Bank will remain under receivership for about six weeks after a depositor moved to court seeking for an extension. The receivership period was set to lapse on Saturday.

In a matter mentioned yesterday at the High Court in the presence of representatives of the depositor, Kenya Deposit Insurance Corporation (KDIC) and Central Bank of Kenya (CBK), the court said that it will hear the application on November 14.

Thursday, CBK said the decision by the High Court to adjourn the matter to next month means the bank will now have to remain under receivership until the application is heard.

“In the meantime, the status quo would be maintained... the time of the receivership would be frozen from today (yesterday) until further orders of the Court,” said CBK.

At the same time, Chase Bank, CBK and the receiver manager have invited depositors for a meeting this morning to update them on the status of the lender, which was put under receivership on April 7 last year.

Last month, CBK Governor Patrick Njoroge said the regulator was still looking at the selected bidders’ proposals to pick on an investor that will save the bank.

“To be honest, this has taken longer than we were expecting if you look at the timelines we published before. This (Chase Bank resolution) is much more complicated than doing tax returns or preparing accounts of a company,” Njoroge said in a recent event.

CBK and KDIC say they are committed to protect the interest of depositors, creditors and other stakeholders.

Depositors wrote to the two in August asking for a favorable resolution.

For depositors with amounts more than the insured Sh100,000, getting a strategic investor to keep the bank on its feet is favourable, unlike liquidating the bank, which will mean paying them only the net amounts that will be realised from selling its assets.

In March, CBK extended the appointment period of the receiver manager for a further six months from April 7, 2017. This is set to end this Saturday.

Interest in the bank, hailed as a relationship bank, has appeared waning. Societe Generale, a French bank, had been tipped to acquire Chase Bank but last month it acquired a licence to operate a representative office in the country.

SBM Holdings of Mauritius, which recently concluded the acquisition of Fidelity Commercial Bank, also withdrew its bid for Chase Bank.

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