Pan African housing lender Shelter Afrique has set aside Sh80 million as provision for possible loss from the collapse of Chase Bank.
Shelter Afrique held Sh412 million in Chase Bank before it was put under statutory management on April 7 following a run on deposits after the Central Bank of Kenya raised questions on insider lending.
“At the time of receivership, Shelter Afrique held deposits with the bank amounting to US$4,120,287 (Sh412 million). It is expected that recovery from the Kenya Deposit Insurance Corporation (KDIC) will not be in full. Consequently, a provision of US$800,000 (Sh80 million) has been made,” said the company in its annual report.
The KDIC has allowed Chase Bank customers to access up to Sh1 million in deposits but is yet to open the window for large corporates such as Shelter Afrique. The mortgage firm had also loaned the bank Sh106 million for a seven-year period ending in 2020.
Chase Bank was earlier this month given regulatory approvals to resume lending to customers and take fixed deposits, raising hope of full recovery.
The lender had fixed deposits valued at Sh56.6 billion as at end of June last year underlining its attractiveness to high net-worth individuals and companies.
Other companies whose cash is held up in the bank include Kenya Ports Authority which had a fixed deposit of Sh2.9 billion and regional insurance company ATI which was holding $2 million (Sh200 million).
The bank which was largely owned by international development financial institutions is currently being managed by KCB Group as the receiver manager.
The Central Bank of Kenya 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 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.
The KCB is expected to be among companies that will bid for Chase Bank, whose model is focused on small and medium-sized enterprises (SMEs).
Chase Bank could represent an attractive franchise with 27,000 customers, largely SME businesses.
It is also a banker to 341 non-governmental organisations and 147 savings and credit cooperative societies.
The KDIC has been optimistic of the bank’s reopening noting it has opened over 3,000 new accounts while in receivership. It said transactions worth over Sh6 billion have been channeled through the lender since it was re-opened on April 27.