Mauritius based SBM holdings picked as Chase Bank investors

Chase Bank Wabera branch a few months before the bank was put under receivership PHOTO COURTESY

Mombasa,KENYA: Mauritius based investment company SBM holdings which runs Fidelity Bank in Kenya has been accepted as the investor for troubled Chase bank.

This follows a bidding process in 2017 that saw among others French bank Societe General, The KCB bank group and I$M bank express their interest in taking over the Bank group.

This is according to a statement released by the Kenya Deposit Insurance Corporation on Friday which indicated that a binding offer had been accepted on 4th of January 2018.

According to the statement, the terms of the binding offer remain similar to was discussed between the KDIC and the investors in October 2017.

“The binding offer accepted on 4th of January 2018 includes the acquisition of certain assets and matched liabilities from the CBLR.” Reads part of the statement.

According to the statement, the transaction would facilitate among other things, the transfer of 75% the value of deposits that are not currently accessible to depositors owing to the receivership state and the transfer of staff and branches.

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The statement further indicates that the Central Bank of Kenya and the Kenya deposit insurance corporation planned to meet officials from SBM holdings next week.

The bank was placed under receivership in April 2016 by the CBK governor Patrick Njoroge following problems in liquidity.

Reports indicate that a  sh. 16.6B insider loan which had a high credit risk had exerted pressure on the bank’s liquidity.

Audit firm Deloitte East Africa which had earlier audited the bank’s financial statements for the year ended 2015, had produced reports insinuating the Bank did not disclose its full details during the auditing process.

This lead to months of social media campaigns and panics among depositors who rushed to make massive withdrawals further weakening its already troubled liquidity.

The acquisition will see SBM holdings(State bank of Mauritius) grow its equity in the Kenyan banking sector after successfully acquiring Fidelity bank in 2017.

The company whose line of business includes retail, SME and corporate banking is the second largest company listed on the stock exchange of Mauritius with assets totaling more than $ 4 billion.

The company is will be expected to inject the necessary capital to raise the troubled bank’s requirements at the central bank.

However the announcement comes just a few hours after two banks, Dubai based United bank limited and London registered United national bank limited moved to court seeking to halt the transaction over a debt dating to way before the bank was put under receivership.