Troubled Kenyan Lender Chase Bank Receives And Accepts Binding Offer from Mauritius Based SBM Holdings Limited

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The Central Bank of Kenya (CBK), an independent public institution that works to ensure stability in prices and promote economic growth in the country, and the Kenya Deposit Insurance Corporation (KDIC), have announced the receipt and acceptance of a Binding Offer from SBM Holdings Limited (SBM) with respect to Chase Bank Kenya Limited (CBLR), which is In Receivership.

The deal comes after months of uncertainty among Chase Bank’s depositors and stakeholders. The troubled lender has been in crisis for close to two years after Kenya’s Central Bank temporarily shut down its operations in 2016.

SBM, which is working to restore the lender’s reputation, is a leading financial services group and the second largest company listed on the Stock Exchange of Mauritius, with a growing international presence currently extending to Madagascar, India and Kenya, where SBM acquired Fidelity Bank in May 2017.

SBM has a market capitalisation of approximately $600 million, with the Government of Mauritius as a significant shareholder, and total assets in excess of $4 billion.

SBM’s Binding Offer, accepted on January 4th, 2018, includes the acquisition of certain assets and matched liabilities from Chase Bank

“This Binding Offer is similar to the Non-Binding Offer that was discussed with depositors on October 6, 2017,” the CBK and KDIC said in a joint statement this week.

“The offer still needs to be executed and operationalised, and it is expected that this transaction will ensure the transfer of 75% of the value of deposits currently under moratorium and the transfer of staff and branches of the existing CBLR operations,” Kenya’s Central Bank added.

On April 7th, 2016, Chase Bank was placed under receivership by the Central Bank of Kenya due to under-reporting of insider loans and not meeting the country’s statutory banking ratios.

Chase Bank re-opened on April 27th, 2016 with KCB, another Kenya-based lender, as the Bank’s receiver-manager.

In April 2016, the bank was put under statutory management by the CBK.

Now, under the new agreement, Chase Bank’s non-moratorium depositors will continue to have full unrestricted access to their funds.

CBK and KDIC plan to meet CBLR depositors on Wednesday, 10th and Thursday, 11th January 2018.

Through this acquisition, and combined with its other operations in Kenya, SBM will bring its experience and expertise from Mauritius and other markets, to further enhance competitiveness and the resilience of Kenya’s banking sector.

CBK and KDIC assess that SBM’s Binding Offer represents a viable proposal for the substantial resolution of CBLR, for the benefit of depositors and the strengthening of the Kenyan financial sector.

“It is expected that the transaction will be concluded upon the execution and operationalisation of the Binding Offer. CBK and KDIC reiterate their commitment in keeping with their respective mandates and in accordance with the Laws of Kenya, to protect the interest of depositors, creditors, and the wider public interest,” the two organisations affirmed in their statement.

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