KCB to sell Sh230m cars in Chase Bank loans recovery
Chase Bank on Mama Ngina Street in Nairobi. KCB took over the management of the bank in April. PHOTO | FILE
What you need to know:
The vehicles are some of the assets seized from former directors, others include property in Nairobi and Dubai.
KCB is auctioning vehicles worth Sh230 million in a Chase Bank loan recovery plan intended to restore the collapsed lender to a firm financial footing.
A total of 93 motor vehicles including cars, tractors, trucks and tippers are set to be auctioned, with prospective buyers expected to place their bids by Friday.
KCB in April took over the management of Chase Bank which had been placed under receivership for two weeks after a run on deposits.
“Finance can be arranged subject to credit appraisal,” a notice on the vehicles’ auction said. KCB was appointed to run Chase Bank and manage its assets and liabilities on behalf of the Kenya Deposit Insurance Corporation (KDIC).
The lender was also given an option to take over majority stake of the mid-tier lender. Among the duties KCB undertook when it took charge of the bank was to verify the collateral and documentation of existing loans.
The exercise was informed by Chase Bank’s flawed loan issuance system that saw it lend billions of shillings unprocedurally in what nearly brought it down.
The Central Bank of Kenya (CBK) in late April seized Sh8 billion from disgraced Chase Bank directors who awarded themselves hefty interest-free loans.
CBK said the directors had awarded themselves 15-year interest-free loans under the guise of Islamic banking.
The prime assets forcefully seized include a business park in Karen, a three-acre parking lot in Nairobi, some 240 acres of land on Mombasa Road, a three-acre plot next the German Embassy on Riverside Drive and various high-end properties in Dubai.
Zafrullah Khan, the ousted chairman of the bank, was named by financial consultancy Deloitte as the chief architect and biggest beneficiary of some Sh11 billion looted from the lender.
The auction comes at a time when loan defaults in the banking sector have hit a 10-year high. Bad loans stood at eight per cent of the total loans issued by banks in April, up from 6.1 per cent in December and 4.6 per cent in June.
The last time bad loans were more than eight per cent of total loans issued by banks was in October 2005.
An increasing number of Kenyans are taking up bank loans to buy vehicles with the cars used as collateral which can be auctioned in the event of a default.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
