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Co-op Bank reveals Sh1 billion locked in Chase and Imperial

shareholders

A Cooperative Bank of Kenya Shareholder peruses the investor report during the bank’s annual general meeting held at Safari Park Hotel in Nairobi yesterday. PHOTO | SALATON NJAU | NMG

Co-operative Bank of Kenya (Co-op) #ticker:COOP was forced to pay investors Sh923 million that its wealth management arm put in a fixed deposit account at the troubled Chase Bank.

Co-op Trust Investment Services Limited invests on behalf of investors like insurance and the money plus a Sh36 million interest is locked in the lender.

Co-op, in making the decision to refund the investors after the fixed deposits matured, argued that the amount could be recovered because Chase Bank has not collapsed.

Central Bank of Kenya (CBK) placed the mid-sized lender under receivership in April 2016 after an unexplained loss of billions of shillings.

“Chase Bank is still operating and there was an indication from the CBK of fully operationalisation of the bank, hence there is likelihood the investments will be recovered,” Co-op told shareholders via its annual report.

READ: Africa stock exchange lobby’s millions locked in troubled Chase Bank

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Impaired in full

“However the management has impaired in full, the accrued interest of Sh36 million arising from the fixed deposits.”

The bank, however, opted not to bear the burden of the Sh274 million that Co-op Trust Investment Services deposited in the fallen Imperial Bank on behalf of pension funds.

“The risk on the investment is carried by the individual pension scheme. There is uncertainty involved in relation to the recoverability of the investment,” said the bank.

Imperial Bank remains shut and under the Central Bank management. It was put under receivership after the bank’s board alerted the CBK to malpractices like fraudulent withdrawals and other illegal transactions amounting to more than Sh34 billion.

Chase is in the hands of the Kenya Deposit Insurance Corporation (KDIC), a state body that protects depositors in case of a bank failure.

The financial services regulator wants to find a strategic investor for Chase, but has not specified what size stake it will sell.

It said it had short-listed an unspecified number of applicants from 12 parties who are expected to submit formal bids by June 9.

“We have no intention of buying the stake at Chase Bank, but are hopeful that we could recover our money if it resumes full operations,” said Gideon Muriuki, Co-operative Bank chief executive.

The bank joins a list of institutions whose money has been locked in Chase Bank. Kenya Tea Development Agency has Sh1.9 billion, betting firm SportPesa (more than Sh500 million) and United Nations Sacco (Sh800 million).