The Central Bank of Kenya (CBK) has approved the liquidation of the assets of Chase Bank which were left out in the SBM Bank takeover. Chase Bank was placed under receivership on April 7, 2016, under the Kenya Deposits Insurance Corporation (KDIC).
CBK has consequently instructed the Kenya Deposit Insurance Corporation (KDIC) to start the liquidation of the remaining assets, with an aim to salvage money for customers with more than Ksh. 100,000 in the bank.
A statement from CBK said, “On April 7, 2021, KDIC submitted the receiver’s report to CBK recommending that Chase Bank in receivership be liquidated. The report indicates that considering the weak status of Chase’s financial position, liquidation is the only feasible option.”
According to CBK’s assessment, the recommendation by KDIC, “Considered that liquidation would facilitate the orderly resolution of the residual assets and liabilities of CBLIR in accordance with the Laws of Kenya, to protect the interest of CBLIR depositors, its creditors, and the wider public interest.”
KDIC is mandated to provide a deposit insurance scheme for customers of member institutions, to provide incentives for sound risk management and generally promote the stability of the financial system and prompt resolution.
Additionally, KDIC protects depositors against the loss of all their deposits or bank balance in the unlikely event of a bank failure.
KDIC has been managing 25% of the value of deposits along with other assets and liabilities that remained in CBLIR following the transfer of 75% of the value of assets transferred to SBM Bank, a subsidiary of SBM Holdings Limited.
During the Chase Bank deal, SBM valued the total assets acquired at Ksh. 69.59 billion, with property, plant and equipment assigned a fair value of Ksh. 1.25 billion. Total liabilities were valued at Ksh. 66.68 billion while deposits from non-bank customers were Ksh. 56.9 billion.