Central Bank of Kenya and Kenya Deposit Insurance Corporation on Tuesday announced the signing of an agreement for the acquisition of certain assets and assumption of deposits by SBM Bank Kenya Limited from Chase Bank.
The agreement concluded discussions between the State Bank of Mauritius (SBM), KDIC and CBK on the Chase Bank transaction that was announced on January 5, 2018.
The Central Bank of Kenya placed Chase Bank under receivership in 2016 due to 'bad financial conditions'. Rumours on social media of Chase Bank's shut down created tension among customers who flooded the banks to withdraw their cash further fueled its woes.
The bank was experiencing severe liquidity and capital deficiencies which made it unlikely to meet its financial obligations. This saw the closure of all 62 Chase Bank branches until new management was put in place.
SBM Holdings Ltd (SBMH), together with its subsidiaries, is a leading financial services group in Mauritius, with a growing international presence currently extending to Madagascar, India and more recently in Kenya, where the SBM Group acquired Fidelity Bank in May 2017, thereafter renaming it SBM Kenya.
The agreement with SBM states that there will be a transfer of 75 per cent of the value of deposits currently under suspension at Chase Bank, and the transfer of the majority of staff and branches of the existing operations. 25 percent of the value of frozen deposits will remain in Chase Bank.
Non-moratorium depositors will also be transferred and will continue to have full unrestricted access to their funds.
The date these deposits will be available, and the details under which the customer accounts will be managed are yet to be announced.
“Through this acquisition, and combined with its other operations in Kenya, SBM will bring its experience and expertise from Mauritius and other markets, to further enhance the competitiveness and resilience of Kenya’s banking sector,” read part of a joint statement by CBK and KDIC.
SBMH is the third largest company listed on the Stock Exchange of Mauritius with a market capitalisation of approximately USD 680 million, with the Government of Mauritius as a significant shareholder, and total assets of USD 5.8 billion as at December 31, 2017.
“CBK and KDIC assess that the transaction represents the substantial resolution of CBLR, for the benefit of depositors and the strengthening of the Kenyan financial sector. CBK and KDIC reiterate their commitment in keeping with their respective mandates and in accordance with the Laws of Kenya, to protect the interest of depositors, creditors, and the wider public interest,” read the statement.