Relief as Chase Bank reopens with mixed fortunes for savers

Troubled lender Chase Bank reopened Wednesday with a mixed bag of fortunes for its customers, who got access to their deposits even as other key services remained unavailable.

The mid-sized lender’s banking halls were opened at 9am and services such as mobile banking app Mfukoni, online banking, ATM services and debit card transactions went live.

Key services such as electronic funds transfer, credit cards, loan applications, overdraft, forex trading, foreign currency accounts, issuance of letters of credit and guarantees, however, remained unavailable as new receiver manager KCB took charge of operations.

The capping of withdrawals at Sh1 million of deposits, meant that 167,290 account holders (equivalent to 97 per cent) of total depositors have full access to their savings.

Chase Bank customers who spoke to the Business Daily breathed a sigh of relief after they regained access to funds that have been locked up for three weeks, but expressed concern over the suspended services.

“It was very distressing for us. But they have shown good faith in opening the bank even though we can’t access some services,” said Teresa, a customer at Chase Bank’s Riverside Drive headquarters.

But in a sign of the level of customer attachment to the troubled bank, Teresa she said she would not consider moving from Chase, citing overdraft facilities and LPO financing as some of the services she frequently used at the mid-sized lender.

Another customer, Alex Wachira, said he was happy to see the bank open, saying the closure had hit his business hard.

“At least we are now happy. I’ve withdrawn using my cheque book. I tried the Mfukoni app earlier in the day and its working,” said Mr Wachira, an investment banker.

About Sh70 million had been withdrawn via Chase Bank’s mobile banking app by midday, according to a source at the distressed lender.

The Central Bank of Kenya on April 7, 2016 unexpectedly placed Chase Bank under receivership owing to liquidity problems created by a run on the mid-sized lender from panicked depositors.

Chase Bank’s reopening is under the management of KCB Group, working with Kenya Deposit Insurance Corporation.

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

Vincent Muriuki, a Nairobi-based businessman, however expressed concern that the bank was not “100 per cent back” as credit services were yet to resume. “I do tenders, so I mostly used bid bonds,” he said.

A customer, who only identified himself as George, said despite being greatly affected by the closure of Chase Bank, he will not stop banking with them.

“I’ll give them (Chase Bank) the benefit of doubt and bank with them as I have been with them for the last three years,” he said.

A different customer, who gave his name as Vijay, said he had been unable to access any cash from his account despite the fact that he had money in there.

“My wife is a cancer survivor,” said a visibly angry Vijay, adding that he had been tossed from branch to branch to withdraw cash to no avail.

KCB Group human resource director Paul Russo is the receiver manager in charge of Chase Bank operations.

“The bank’s history of exceptional customer service has not changed despite the receivership,” said Mr Russo.

Chase Bank has always marketed itself as small and mid-sized entrepreneurs’ bank and a “relationship bank” that offers personalised customer care service at its branches and through digital platforms such as social media.

“Chase Bank’s unparalleled support to the small and medium sectors will continue unabated. We are cognizant of the central role SME’s play in the country’s economic growth,” said the receiver manager.

Those with cash more than Sh1 million are set to receive their money “in a structured manner” in future, the Central Bank of Kenya.

“Any new deposits will thereafter be immediately available,” said CBK.

KCB plans to buy a controlling stake in Chase Bank, but details of the transaction remain scanty.

“KCB will undertake a detailed due diligence review of CBL. This will inform decisions relating to KCB’s interest in a majority stake,” said CBK governor Patrick Njoroge.