Accra, Ghana
36°C
IT'S TIME SWITCH TO 4G ON MTN

GSE Feed

Forex Rate

East Africa: Chase Bank sale frees billions for companies

arm+cement

Companies that have deposits running into billions of shillings locked in the troubled Chase Bank are set for a major cash boost with the sale of the lender releasing up to 75 per cent of their money.

Betting firm SportPesa, investment company Centum , State-owned Kenya Ports Authority (KPA), the Kenya Tea Development Agency (KTDA), United Nations Sacco, and South Africa’s hotel group City Lodge are among the institutions with large sums held at Chase Bank after it was placed under receivership.

Others are Co-operative Bank of Kenya and Rafiki Microfinance Bank, a subsidiary of Chase Bank.

The Law Society of Kenya (LSK) and thousands of small and medium enterprises also have money in the bank.

Chase Bank was placed under receivership on April 7, 2016 following a run on deposits after reports of liquidity problems spread online.

It was re-opened on April 27, 2016 under the management of the Kenya Deposit Insurance Corporation (KDIC).

On Friday, Mauritian lender SBM Holdings was given the green light by the Central Bank of Kenya (CBK) to take over Chase Bank.

As part of the deal, Mauritius’ second-largest lender will absorb Chase Bank’s staff estimated at 1,300 in about 62 of its branches.

“It is expected that this transaction will inter alia ensure 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,” said the CBK.

Chase Bank has locked in Sh1.9 billion belonging to the KTDA. SportPesa is reported to have had more than Sh1 billion from its gambling operations held there, while the KPA has Sh3 billion.

Rafiki has Sh2.5 billion locked in, Centum through its subsidiary Two Rivers Development Ltd Sh650 million, UN Sacco 800 million, Co-op Bank through its wealth management unit Sh900 million and City Lodge Sh384 million.

Shelter Afrique is also understood to have money locked in the troubled lender.

Most of the funds had been put in fixed deposit accounts of what was then a fast-growing bank.

The CBK said on Friday it will jointly with the KDIC meet Chase Bank depositors on Wednesday and Thursday to brief them on the takeover.

The go-ahead came as two foreign banks moved to the High Court seeking to stop SBM Holdings from acquiring Chase Bank over a Sh1.1 billion debt.

Credit: CNBC Africa

Ghana Business News