× Business BUSINESS MOTORING SHIPPING & LOGISTICS DR PESA FINANCIAL STANDARD Digital News Videos Health & Science Lifestyle Opinion Education Columnists Moi Cabinets Arts & Culture Fact Check Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
×

Chase Bank sale was illegal, investors now claim in court

BUSINESS
By Kamau Muthoni | Dec 21st 2021 | 3 min read
By Kamau Muthoni | December 21st 2021
BUSINESS

Shareholders of the defunct Chase Bank have gone to court challenging the sale of the lender to the State Bank of Mauritius (SBM).

They have accused the Central Bank of Kenya (CBK) and the Kenya Deposit Insurance Corporation (KDIC) of hurriedly selling off a 75 per cent stake of Chase Bank to the Mauritian lender without following the law.

The shareholders accuse the two State institutions of hiding crucial information that would have exposed the flaws in the deal.

­­­­­Those who have sued the regulator and KDIC are Rinascimento Global Ltd, One Rina Ltd, trustees of the employees stock ownership programme and Carlo Van Wageningen.

Others are Namaja Investment Ltd, Realcap Investment Ltd, Frangie Investment Ltd, Dawood Shah, Dr Frank Mwongera, Anthony Gross and Rowena Gross.

Through their lawyer Ahmednassir Abdullahi, they argue that the information withheld by CBK and KDIC would have helped them challenge the sale three years ago.

“The reason this information is being withheld by the respondents is that the information sought relating to the sale of the carved out assets of Chase Bank will eventually demonstrate the fraudulent and criminal enterprise of high ranking officials of the first and second respondents (CBK and KDIC) while disposing off Chase Bank to SBM Holdings,” says Ahmednassir in court papers.

“The information sought will prove beyond doubt how malicious the first and second respondents acted in quickly selling Chase Bank’s carved out assets without the petitioners’ knowledge and to their detriment.”

Chase Bank was placed under receivership on April 7, 2016 after failing to meet its financial obligations and was subsequently liquidated on April 16 this year.

Before the storm rocked the board over insider loans and other malpractices, Chase Bank was ranked as a tier two bank with 62 branches across the country and approximately 1,400 employees and 316,958 depositors.

According to Ahmednassir, as of Sept 2015, the defunct lender was as ranked number 10 out of the 43 banks in a country with a balance sheet of Sh 151 billion.

“The bank had a strong balance sheet a few months before the receivership following a period of stable organic growth spanning over three decades,” he argues.

The lawyer now says Chase Bank was sold to SBM without his clients’ consent as they were allegedly not informed of the intended sale.

CBK announced the sale of Chase Bank on January 5, 2018.

This is after the lender suffered liquidity deficiency, leading to the closure of all its branches.

In the agreement, SBM was to get 75 per cent carved out assets and liabilities of Chase Bank.

Court papers show that the net value gain made by SBM Holdings Mauritius in acquiring Chase Bank as of April 2018 was $260 million (Sh29 billion) after tax.

Ahmednassir claims that he wrote to KDIC seeking information on the sale, but the insurer said it was not part of the transaction.

In his letter dated October 26, 2021, the senior counsel sought to know the terms of sale of Chase Bank’s assets to SBM, the agreements executed and the process through which the lender was sold.

Ahmednassir claims KDIC referred him to CBK but the regulator never responded to his letter over the matter.

He said he wrote to CBK but did not get an answer. The petitioners now want the court to compel CBK and KDIC to release information on the lender’s sale and be compensated for breach of their rights.

Share this story
Safaricom to up SMS promos as text traffic falls, WhatsApp grows
Telco reported an 18 per cent drop in messaging revenue in the 2021 half-year to Sh5.87 billion, messages dropped by over 20 percent.
China rejected Kenya's request for Sh32.8b debt moratorium
China is Kenya’s largest bilateral lender with an outstanding debt of Sh692 billion.
.
RECOMMENDED NEWS
Feedback