Kenya’s Chase Bank reopens tomorrow under the management of another lender

Chase Bank will reopen on Wednesday under the management of Kenya Commercial Bank (KCB).

The bank collapsed earlier in the month after it ran out of cash to pay panicky customers who requested their deposits amid reports of unlawful internal transactions by its top managers. The Central Bank of Kenya (CBK) had since placed it in receivership.

CBK Governor Patrick Njoroge said on April 15 that five institutions, both local and foreign, had signified interest in buying the bank. But last week, KCB beat eight other bidders, including the current shareholders of Chase Bank, two foreign institutions and three local banks, to clinch the deal to manage the lender for a fee.

KCB will manage Chase Bank for an unspecified period, according to the CBK, during which services to customers will be gradually increased. The bank will first allow depositors to withdraw a maximum of Sh1 million from their accounts. Those whose balance is more than the Sh1 million will receive their money “in a structured manner” in future, the CBK said.

Upon reopening, the bank’s mobile and ATM services as well as the Internet banking platform will also be revived. Issuance of new loans will be limited to individuals who make fresh deposits, while individuals with existing deposits will not be able to access loans until KCB undertakes to verify the collateral and documentation upon which existing loans were issued.

As manager of Chase Bank, KCB will follow up on full documentation on all facilities issued.

“All outstanding loans and transactions will be reviewed and communication shared upon re-opening,” said Mr Joshua Oigara, KCB’s chief executive officer during a Q&A session on Twitter Monday morning.

KCB will seek to acquire a majority stake in Chase Bank. “We had given a proposal but the acquisition details have not been discussed,” Mr Oigara said on Twitter.

He disclosed that all Chase Bank employees resumed duty on Monday in preparation for the bank opening on Wednesday.