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Chase Bank gets CBK approval to resume lending

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A Chase Bank branch on Mama Ngina Street in Nairobi. PHOTO | FILE

Summary

  • Resumption by the bank to take new deposits is expected to avail more lending opportunities to customers.
  • CBK had earlier indicated that it will next month pick a new investor to acquire a majority stake as part of efforts to fully restore the lender.

Chase Bank has made a big step towards full recovery after the Central Bank of Kenya (CBK) Wednesday approved the lender to resume offering customers loans and take fixed deposits after four months of waiting.

The new approval expands the bank’s basket of financial services after the banking sector regulator placed it under receivership in April, prompting its closure and reopened later in the same month.

The lender had been limited to only a few services such as money transfers and automated teller machine (ATM) and was awaiting the approval to accept term deposits and issue loans.

“The move marks a major milestone in the turnaround efforts of the bank, signalling that most of the major issues under resolution have been addressed, paving the way for full resumption of banking services to all customers,” the lender said in a statement.

The greenlight to take new deposits, the lender argues, will boost lending opportunities to customers and accelerate recovery pace.

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The bank was placed under the receivership of the CBK arm — Kenya Deposit Insurance Corporation (KDIC) in April.
The CBK early this month said it would next month pick a new investor to buy a majority stake in Chase Bank as part of efforts to fully revive the lender.

This came after KCB Group, which was appointed to manage Chase Bank, said its role in reopening the lender is almost complete, paving the way for the regulator to call for bids from multiple investors interested in the buyout.

KCB is expected to be among companies that will bid for Chase Bank, whose model is focused on small and medium-sized entreprises (SMEs).

Chase Bank represents an attractive franchise with 27,000 customers, largely SME businesses.

It is also a banker to 341 NGOs and 147 savings and credit cooperative societies.

The lender has 62 branches with Rafiki Microfinance Bank and investment bank Genghis Capital as its subsidiaries.

The CBK on April 7 unexpectedly placed Chase Bank under receivership owing to liquidity problems created by a run on the mid-sized lender from panicked depositors.

The lender of the last resort later in the same month reopened all Chase Bank branches and reinstated services including ATM and money transfers, recording 3,000 new customers and net deposits of Sh152 million.

But reopening limited customer withdrawals to Sh1 million of their deposits.

“Since April, Chase Bank has recorded improved inflows in excess of Sh10 billion while thousands of new customers have also come on board since the bank reopened its doors,” the lender says.

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