Companies

Chase Bank’s owners pull the diplomatic card

chase

Chase Bank depositors outside a Nairobi branch after the lender was put under receivership by the Central Bank of Kenya on April 7, 2016. PHOTO | FILE

Summary

  • German investment firm DEG, French private equity fund Amethis Finance and Swiss venture capital firm responsAbility argue that KCB has kept them in the dark with no updates on ongoing efforts to fully re-open the SME-focused lender.

Chase Bank’s foreign shareholders have turned to their respective embassies in Nairobi to help resolve their concerns on KCB’s ‘conflicted role’ as receiver manager and presumed buyer of a significant stake in the collapsed lender.

German investment firm DEG, French private equity fund Amethis Finance and Swiss venture capital firm responsAbility have expressed their concerns through a letter to the Central Bank of Kenya; copied to the German, France, Dutch and Swiss embassies.

The foreign shareholders, who control 20.9 per cent of Chase Bank, argue that KCB has kept them in the dark with no updates on ongoing efforts to fully re-open the SME-focused lender.

Through law firm Anjarwalla & Khanna, the shareholders reckon that Kenya has signed investment deals with their countries that protect their business interests in Nairobi.

“The shareholders of the bank include international investors, each of whom have various rights under bilateral investment treaties (BITs) entered into by their host nations with Kenya (these include, France, Germany, the Netherlands and Switzerland) and under which the Kenyan government guarantees investors “fair and equitable treatment” said the foreign shareholders.

KCB has called a press conference on Thursday “to provide a status update on the (Chase) bank’s journey to recovery 90 days down the line” as per a media invite sent on Wednesday.

READ: KCB takes pole position in battle to acquire troubled Chase Bank

Their concerns include KCB’s commitment to buy the lender; and a lack of resumption of full banking services such as loan facilities, access to deposits exceeding Sh1 million, sacking of employees, and impairing of alleged toxic and irrecoverable loans.

“Notwithstanding a clear conflict of interest in the dual role…the shareholders would fully support all stakeholders in the firm belief that both the CBK and KCB would adhere to the highest standards of transparency, fair play and accountability on the process going forward,” reads a letter by Chase Bank owners dated July 6, 2016 and addressed to KCB chief executive Joshua Oigara.

“It has, therefore, been of great concern that no formal discussion with shareholders has taken place or that no further details as stipulated in CBK’s press release of April 20, 2016 have been released or communicated to shareholders or to the general public,” says the letter signed by Dutch investor Carlo Van Wageningen on behalf of the other shareholders.