Mauritius lender to acquire troubled Chase Bank

Depositors try to get some money from the Fontanela Chase Bank branch's ATM in Mombasa soon after all branches country-wide were re-opened under the receivership of KCB, April 27, 2016. Depositors were only allowed to withdraw a maximum of Sh1 million and below. [Gideon Maundu| Standard]

Many suitors came, saw but stepped back. But after 20 agonising months for Chase Bank depositors, Mauritius lender SBM Holdings will soon acquire the troubled firm.

According to the Central Bank of Kenya (CBK), the binding offer from Mauritius’ second-largest lender has been accepted and will include acquisition of certain assets and matched liabilities from Chase Bank.

“CBK and KDIC (Kenya Deposit Insurance Corporation) assess that SBM’s binding offer represents a viable proposal for the substantial resolution of Chase Bank, for the benefit of depositors and the strengthening of the Kenyan financial sector,” said the two agencies in a joint statement.

Once completed, the deal will see the transfer of 75 per cent of the value of deposits currently under moratorium and the transfer of staff and branches of the existing Chase Bank operations to SBM.

White smoke

This is white smoke for depositors who had more than Sh100,000 in their respective bank accounts by the time it was put under the management of KDIC on April 7, 2016.

Keeping the bank open will save the deposits as opposed to the path of liquidation, which would have meant selling off the bank’s assets and paying the depositors depending on the realised money.  

CBK and KDIC announced that they will be meeting with the depositors of the lender next week on Wednesday and Thursday. The last time the two institutions had a direct engagement with depositors was in October last year.

At one point, investor interest in the bank, hailed as a relationship bank was seen waning. Suitors such as Societe Generale, First Rand, Stanbic Bank, Kenya Commercial Bank and I&M were tipped to be at the forefront of acquiring the bank, only to step back.

The completion of the acquisition will be the second in less than 12 months for SBM, which in May last year acquired Fidelity Bank and injected fresh capital of Sh1.45 billion.

“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 competitiveness and the resilience of Kenya’s banking sector,” said the statement.

SBM boasts of assets in excess of $4 billion (Sh412 billion) and market capitalisation of about $600 million (Sh62 billion). Kenya’s largest bank by assets, KCB, had assets valued at Sh480 billion by September last year.

But as depositors wait for the completion of the deal, they will be hoping that CBK and KDIC navigate through the pending court case. Two foreign banks - United Bank Limited of Dubai and United National Bank Limited - want the deal stopped.

The two say that Chase Bank owes them money on account of two letters of credit issued in 2015 and 2016.