“It is Time to Say Goodbye,” SBM Kenya Takes Over Chase Bank

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SBM Holdings Ltd has acquired Chase Bank Kenya Limited (In-Receivership) through its subsidiary SBM Bank. The move comes after having completed the acquisition of certain assets.

In the acquisition, SBM Kenya took over 75 per cent of the value of deposits under moratorium at CBLR, all non-moratorium deposits at CBLR. It will take up over a majority of CBLR branches and employees.

The remaining 25 per cent of the value of moratorium deposits and other assets and liabilities remains in CBLR.

In a Tweet, Chase Bank announced to its customers, “We are not chasing you away…but it’s time to say goodbye.”

The Central Bank of Kenya and the Kenya Deposit Insurance Corporation to SBM Kenya Ltd handed over the bank Monday, signalling the official start of the expanded operations of SBM Kenya Ltd.

Dr Patrick Njoroge, CBK Governor, remarked, “This is a historic day in Africa: in the past, when you closed a bank, it stayed closed. But 97% of Chase Bank Kenya depositors got paid in full; others got 75% in a private-sector driven transparent process.”

Moses Harding, Chief Executive Officer, India & East Africa, SBM Holdings Limited, notes said, “It’s a great day for all of us in SBM Holdings and SBM Kenya as we expand our operating infrastructure to 60 branches, 850 employees, just shy of Ksh 100 Billion Balance Sheet and over 150000 loyal customers!

“It’s personal pride for me to assemble together the operating infrastructure of FCB and Chase Bank Kenya under SBM Kenya, making it a top Tier 2 Bank in Kenya within a short time and need to double the size to be a Tier 1 bank! It is a glorious 2-year phase for me in Kenya!

According to Harding, SBM Kenya will position itself in the market as a financial, investment and transaction solutions partner, helping you in cost optimization and revenue maximization for a better return on your balance sheet.

The SBM Group has committed an additional capital infusion of $60 million for this portfolio purchase, taking its total investment to $86 million in Kenya.

The Group will now be able to offer its clients multi-jurisdiction banking as well as Non-Banking Financial relationships spanning India, Madagascar, Mauritius, and Kenya, with Seychelles launching soon. SBM Kenya looks forward to building strong and trusted relationships with other banking and non-banking financial institutions in Kenya.

Chase Bank became the first bank in Kenya to go under receivership and was revived within three weeks.

The biggest development in the Kenyan banking sector was placing Chase Bank Kenya under receivership on April 7, 2016, after a run on deposits revealed that some directors had issued larger unsecured loans to themselves than the bank’s working capital. The problem was further escalated with the Bank’s chairman, and the group managing director resigned shortly after announcing restated earnings with a qualified audit opinion.

The central bank of Kenya blamed social media for the bank run.

“Chase Bank Limited experienced liquidity difficulties following inaccurate social media reports and the stepping aside of two of its directors. Consequently, it was unable to meet its financial obligations on April 6, 2016,” the Central Bank of Kenya said in a statement.

Then, according to Dr Patrick Njoroge, Chase Banks had 27,000 SME customers, 431 Non-Governmental Organizations, and 147,000 SACCOs as its depositors and customers.

Kenya Commercial Bank (KCB) was chosen by the CBK to take over the management of Chase Bank.


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