Mauritian lender SBM Holdings has received the Central Bank of Kenya (CBK) greenlight to take over troubled Chase Bank.
As part of the deal, the regulator said SBM will acquire the lender's carved out assets and liabilities.
The deal will also see the Mauritius-based lender absorb Chase Bank’s staff estimated at 1,300 and about 62 branches.
“The offer still needs to be executed and operationalised, and it is expected that this transaction will inter alia ensure the transfer of 75 per cent of the value of deposits currently under moratorium and the transfer of staff and branches of the existing Chase Bank operations,” said CBK in a statement Friday.
Central bank said it will jointly with the deposit insurer, the Kenya Deposit Insurance Corporation (KDIC), meet Chase depositors next week on Wednesday and Thursday over the takeover.
The go-ahead comes as two foreign banks are in the High Court seeking to stop Mauritius SBM Holdings from acquiring the troubled lender over a Sh1.1 billion debt.
United Bank Limited (UBL) of Dubai and its London-registered subsidiary United National Bank Limited (UNBL) claim that Chase Bank owes them the money in favour of two separate letters of credit they issued on its behalf in 2015 and 2016, a few months before it was placed under receivership.
Chase Bank was placed under receivership in April 2016 following a run on deposits after reports of liquidity problems spread online.
SBM, which is Mauritius' second largest bank, had earlier acquired full ownership of bottom-tier lender Fidelity Bank in 2016, and rebranded it to SBM Kenya earning itself, through the deal, a presence in Kenya and the region.
The Chase sale is expected to squeeze out of the industry main shareholders of the previously fast-growing bank, including former chairman Zafrullah Khan.
The Chase Bank owners had sought CBK assurances of fairness in sale.
“CBK and KDIC reiterate their commitment in keeping with their respective mandate and in accordance with the laws of Kenya, to protect the interest of depositors, creditors and the wider public interest,” said CBK.