SMB finally seals Chase Bank deal

A customer makes a withdrawal at a Chase Bank ATM in Mombasa soon after the reopening of the lender's branches in April 2016. The bank had about Sh76 billion as deposits when it was put under receivership. [File, Standard]

SBM Kenya has signed an agreement that will see it take control of some assets and deposits of Chase Bank, which is in receivership.

The conclusion of the deal wraps up two acquisitions of Kenyan banks by the Mauritius lender in less than a year. It acquired Fidelity Bank in May last year.

On Tuesday, the Central Bank of Kenya (CBK) and the Kenya Deposit Insurance Corporation (KDIC) announced the signing of the deal that paves the way for depositors to get access to their money over time.

“This concludes the discussions between SBM, KDIC, and CBK on the Chase Bank transaction that was announced on January 5, 2018,” said CBK and KDIC in a joint statement.

Even though CBK said non-moratorium depositors would also be transferred and would continue to have full unrestricted access to their funds, the dates have not yet been set.

“The date these deposits will be available and the details under which the customer accounts will be managed will be announced shortly,” said the regulator and KDIC.

According to the agreement, there will be a transfer of 75 per cent of the value of deposits currently under moratorium at Chase Bank to SBM.

In addition, a majority of staff and branches of the existing Chase Bank operations will also be transferred to SBM.

However, 25 per cent of the value of moratorium deposits will remain in Chase Bank. At the time it was put in receivership, it had about Sh76 billion as deposits.

Of the money, 75 per cent will be moved to SBM Kenya while a quarter of it will be held in a current account.

This means that customers will be able to get their money without restriction and the funds will not earn any interest.

Usage terms

However, another quarter will be held in a savings account, earning an interest of 6.65 per cent per year with unrestricted usage terms.

CBK and KDIC said the remainder of each transferred deposit would be held on fixed term deposit with SBM Kenya at an interest rate of 6.65 per cent per year.

“Such deposits (together with the interest thereon) to mature as to one-third of such remainder on the first, second, and third anniversaries of the transfer respectively,” said CBK and KDIC.