The Central Bank of Kenya has given the greenlight for the liquidation of Chase Bank, paving the way for disposal of assets and settlement of liabilities for the lender currently in receivership.
On April 7, the Kenya Deposit Insurance Corporation (KDIC) submitted the receiver’s report, recommending that Chase Bank Ltd in Receivership (CBLIR) be liquidated. The report notes that owing to the weak status of the lender’s financial position, liquidation is the only feasible option.
Liquidation is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company cannot pay its obligations when they are due.
“CBK has assessed the recommendation by KDIC, and considered that liquidation would facilitate the orderly resolution of the residual assets and liabilities of the bank,” the CBK said in a statement issued on Friday, April 16.
“Subsequently, CBK has appointed the KDIC as liquidator of Chase Bank in receivership. KDIC will release information about the liquidation of CBLIR and payment of depositors in due course.”
On April 7, 2016, the banking industry regulator appointed KDIC as receiver for Chase Bank when the lender failed to meet its financial obligations.
The bank’s former chairman, Mohammed Khan, and six others have since been sued for theft of KES1.1 billion shillings.
In April 2016, the KDIC appointed KCB as manager of the bank in-receivership, enabling the customers to make withdrawals of up to KES1 million. On this basis, 162,970 deposit accounts, equivalent to 97 per cent of the depositors’ accessed their money.
In August, 2018, about 75 per cent of the value of deposits and value of CBLIR assets were carved out and transferred to SBM Bank Kenya Limited, a subsidiary of SBM Holdings Limited, enabling depositors to access their frozen deposits, said CBK statement.
KDIC has managed the remaining 25 per cent of the value of deposits alongside other assets and liabilities in CBLIR.
The move to liquidate CBLIR follows an external audit of the lender, a process that was concluded earlier this month, said the regulator.