Two foreign banks are in the High Court seeking to stop Mauritius lender SBM Holdings from acquiring Chase Bank 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 and the Kenya Deposit Insurance Corporation (KDIC) are listed as the defendants in the suit.
SBM, which had earlier acquired full ownership of Kenya’s bottom-tier lender Fidelity Bank in 2016, had in May announced its bid to take over Chase.
But the deal was reportedly slowed down by prolonged electioneering period in Kenya.
“Pending hearing and determination of this application, a temporary injunction restraining the first and second defendants…from proceeding with any transactions arrangements, agreements and/or deals…dissipating, excluding and transferring or otherwise disposing of the assets of chase bank,” say the suit papers.
The two firms further want the KDIC, a state body that protects depositors in case of a bank failure, ordered to deposit $10.5 million (Sh1.1 billion) in a joint interest-accruing account.
The amount is the total sum allegedly owed the two firms by the Chase bank and the accrued interest.
Chase Bank is under receivership and was temporarily closed in April 2016 by the regulator after an unexplained loss of billions of shillings.
Chase Bank issued the Sh1.1 billion letter of credit to Louis Dreyfus and guaranteed to pay their suppliers.
But the payment to supplies were made by UBL and UNBL in a deal agreed with Chase Bank.