Capital Markets

Insurer Liberty writes off Sh187m in failed lender’s bond issue

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

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Summary

  • Liberty Life impaired Sh187.5 million of the total Sh250 million invested in the Chase Bank (K) Limited (in receivership) corporate bonds.
  • CIC Insurance Group also suffered the same fate.
  • CMA had approved the issuance of the bond in June 2015 and Chase managed to raise Sh4.8 billion in the first tranche.

Insurance group Liberty Holdings #ticker:CFCI has written off Sh187.5 million of the Sh250 million it had invested in Chase Bank corporate bond, underscoring the high cost firms are paying for the collapsed bank.

Chase Bank has since been acquired by Mauritius SBM Holdings following collapse in April 2016, resulting in the Sh4.8 billion bond being suspended from trading at the Nairobi Securities Exchange (NSE).

Investors have since been unable to cash out or earn any interest.

“Liberty Life impaired Sh187.5 million of the total Sh250 million invested in the Chase Bank (K) Limited (in receivership) corporate bonds based on directors’ assessment of recoverability,” the group says in its 2017 financial year report.

READ: Insurer Liberty's Sh250m tied up in shelved Chase Bank bond

The Capital Markets Authority (CMA) had approved the issuance of the bond in June 2015 and Chase managed to raise Sh4.8 billion in the first tranche. The bond was to mature in 2022.

CIC Insurance Group also suffered the same fate. Its exposure is Sh155 million and it had impaired it by Sh23 million as at December 31, 2017, Group chief executive Tom Gitogo told the Business Daily last month.
“Following our continuous review of institutions we invest in, we had progressively reduced this to zero ahead of the bank’s closure,” said Mr Gitogo.