Chase Bank depositors get Sh730m payout


Chase Bank customers mill around the closed bank along Mama Ngina Street in Nairobi. FILE PHOTO | EVANS HABIL | NMG

The depositors of Chase Bank Limited have received Sh730 million in cumulative compensation from the Kenya Deposit Insurance Corporation (KDIC) after the bank was sent into liquidation in April 2021.

According to KDIC, the compensation which covers insured deposits in the bank represents 70 percent of the Sh1.043 billion in protected deposits –of up to Sh500,000 per account— at the institution.

The deposit insurer hopes to raise the compensation payout before the end of the payout period in April this year.

“Before the expiry of the payout period, we project to have paid up to 99 percent of protected payments for Chase Bank Limited (In Liquidation) which now stand at 70 percent. Protected payments are made when an institution is placed under liquidation and must be claimed within two years upon placement of a notice inviting depositors to lodge a claim,” KDIC Acting CEO Hellen Chepkwony told the Business Daily in emailed responses.

The Central Bank of Kenya (CBK) ordered the liquidation of the lender on the recommendation of KDIC which had in a receiver report indicated that the bank had a weak status, both from a financial and liquidation position making liquidation the only feasible option.

“CBK has assessed the recommendation by KDIC, and considered that liquidation would facilitate the orderly resolution of the residual assets and liabilities of Chase Bank Limited (then in Receivership) in accordance with the Laws of Kenya, to protect the interest of the bank’s depositors, its creditors and the wider public interest,” the CBK stated in April 2021.

KDIC had been appointed as the receiver of Chase Bank Limited on April 7, 2016 following a run on the bank with KCB Bank Kenya being named the manager of the lender days later after it was placed under receivership with the move aimed at ensuring the continuity of the bank’s operations.

An estimated 162,970 deposit accounts equivalent to 97 percent of the bank’s depositors fully accessed their funds after the bank resumed operations on April 27, 2016 under KCB’s management.

In August 2018, SBM Bank Kenya carved out 75 percent of Chase Bank's assets and liabilities which included 75 percent of deposits allowing further access to funds by depositors.

KDIC has since been managing the remaining 25 percent of deposits alongside other assets and liabilities up to the 2021 liquidation order.

Currently, KDIC is also tasked with overseeing the liquidation of both the Charterhouse Bank and Imperial after the CBK okayed their liquidation.

The deposit insurer however notes that suits challenging the liquidation order have slowed down payments on the banks’ secured deposits.

“Payments for Charterhouse and Imperial Banks are subject to the outcome of ongoing litigation,” added Mrs Chepkwony.

Data from KDIC shows total protected deposits in Charterhouse Bank stood at Sh317 million as of June 2020.

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