Chase Bank customers withdrew Sh1.6bn in first three days

Chase Bank customers withdrew a total of Sh1.6 billion in the first three days of re-opening against deposits of Sh100 million in the same period, the Central Bank of Kenya has told MPs.

The Kenya Deposit Insurance Corporation (KDIC), an agency of the CBK appointed as the official receiver of Chase bank, told MPs Tuesday that the lender’s customers withdrew slightly over Sh1 billion on Wednesday, Sh400 million on Thursday and Sh200 million on Friday.

“On reopening, the depositors continued transacting with the bank and withdrawals dropped by 70 per cent the following day,” the KDIC acting chief executive officer, Ahmed Mohammud, told the National Assembly’s Finance, Planning and Trade committee on Tuesday.

He added that the lender will from Wednesday clear cheques and RTGS’s through the Kenya Commercial Bank (KCB) who were appointed as the receiver managers.

Mr Mohammud said the KDIC talked to big depositors not to withdraw their money, adding that they have agreed to continue transacting with the troubled lender.

A run on the bank triggered by adverse publicity following the exit of two directors and revelations of insider lending forced the bank to close its doors on April 7, 2016.

Mr Mohammud told the Benjamin Lang’at-led committee that KDIC had managed to recover assets worth Sh8 billion that were irregularly obtained from the bank. The assets are in the custody of the deposit insurance corporation.

“We will be pursuing the directors for insider lending and ensure that all loanees pay back the money,” said Mr Mohammud.

He said KDIC relied on the expertise of KCB in re-opening the small and micro enterprise lender. “We are riding on their (KCB) expertise,” said Mr Mohammud.

READ: Relief for depositors as Chase Bank reopens

Kisumu county women representative Rose Nyamunga sought to know when the Sh1 million cap on withdrawals would be lifted. She said it had affected services of the Affirmative Action Fund which had deposits in Chase Bank Kisumu branch.

“We only accessed Sh1 million and we have so many clients waiting. When will you increase cap of the Sh1m? You should have to mind our plight,” said Ms Nyamunga.

The KDIC said they are monitoring the Chase Bank’s operations and would make a decision on when to lift the cap on withdrawals once the lender returns to sound financial footing. The CBK put the bank on 12-month receivership “It may be lifted as soon as possible. It’s not necessary that we will stay on for 12 months,” he said.

Nominated MP Oburu Oginga asked KDIC to reveal whether KCB would buy a majority stake in Chase bank.

“I don’t think they will let it (Chase Bank) go. They may buy a stake. Chase bank is very attractive. KCB has shown interest in buying a majority stake,” he said.

On deposit payments in 24 collapsed institutions, Mr Mohammud said KDIC had managed to pay depositors and creditors Sh7.4 billion as at January 2016.

“We have lost about Sh50 billion out of the collapsed institutions from the year 1993. Further deposits are made as institutions recover debt and realise assets.