The State Bank of Mauritius (SBM) has finalized the agreement on the acquisition of 75 percent of selected assets and matched liabilities from Chase Bank, a deal that ends the bank’s two-year receivership.
On April 17, Central Bank of Kenya (CBK) and Kenya Deposit Insurance Corporation (KDIC) made an announcement on the signing for the acquisition of the assets and transfer of deposits to SBM Bank Kenya Limited. The discussions had been tabled since January 5, 2018.
Once reopened, Chase Bank customers will have access to 75 percent of the Sh76 billion in deposits once the bank is re-opened.
According to the KDIC, 25 percent of the deposits will be immediately accessible to customers. Another 25 percent of the deposit owed will be moved into an interest-earning savings account, which will also be accessible to the customers.
“A further 25 percent of each transferred deposit will be held at an interest rate of 6.65 percent per annum by SBM Kenya savings account with unrestricted usage,” KDIC added.
The rest will be deposited in a fixed deposit with the earning interest rate account for a three-year period also earning a 6.65 percent interest per annum.
This comes as a relief to customers of Chase Bank, which was placed under receivership in 2016 due to unfavorable financial conditions. Rumors circulating on social media platforms regarding the shutting down of the bank created a rush where many customers withdrew their cash.
With its woes fueled and the condition of severe liquidity and capital deficiencies, it was highly unlikely that Chase Bank would meet its financial obligations. As a result, all the 62 branches of the bank across the country were closed.
“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 the competitiveness and resilience of Kenya’s banking sector,” read a joint statement by CBK and KDIC.
It further noted that CBK and KDIC assessed that the transaction represents the substantial resolution of CBLR, for the benefit of depositors and the strengthening of the Kenyan financial sector. They also reiterated 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.
SBM Holdings Limited (SBMH) is the same institution that acquired Fidelity Bank and renamed it SBM Kenya. It has a growing presence in international space and is the third largest company listed on the Stock Exchange of Mauritius with a market capitalization of approximately 680 million US dollars. The significant shareholder is the Government of Mauritius and its total assets amount to 5.8 billion US dollars.