Chase Bank staff in the dark over Sh600m stakeMonday May 28 2018
Employees of Chase Bank, who pumped millions of shillings into the lender’s share ownership programme are facing possible loss after the Central Bank of Kenya (CBK) rebuffed their enquiry on the future of their investment following the recent sale of the bank to Mauritians.
Correspondence seen by the Business Daily shows the CBK has remained non-committal on the fate of the employee share ownership plan (Esop) that valued workers’ stake in the bank at more than 4.3 per cent in 2015.
Global Credit Rating company’s (GCR) in a 2015 ratings report showed Chase Bank raised Sh600 million through its employee share ownership plan around the time it authorised a rights issue that raised Sh1.6 billion.
The Esop was established in 2006 as part of a bid to motivate employees. Chase Bank collapsed in 2016 with deposits of more than Sh100 billion, part of which was returned to small depositors while it was under the care of the CBK. Mauritius based lender SBM formally took over Chase Bank mid-April this year upon conclusion of a sale deal.
Through Okubasu and Munene advocates, Chase employees in a letter dated May 3 this year requested the CBK to furnish them with information and particulars of the sale of Chase Bank to the Mauritian lender SBM Group. The employees are now accusing the CBK of neglecting their stake in Chase Bank – having offered any information on their investment as it pursued the sale.
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“After the bank was placed under receivership, our clients learnt that the Central Bank of Kenya, had accepted an offer from SBM holdings Limited for the sale of the bank,” lawyer Dan Okubasu wrote to the CBK in the letter also copied to the Kenya Deposit Insurance Corporation (KDIC).
“Despite their legal and equitable stake and interest in the bank they have been kept oblivious of the transaction let alone the fate of their interest as employees under Esop in the bank.”
But in a rejoinder through Oraro and Company advocates, the CBK told the employees the information on the transaction was not within its purview.
“…The information you require is not within the control of power of the Central Bank of Kenya. It accordingly is not in a position to provide you with the same,” Oraro and Company advocates wrote on behalf of the CBK.
The letter is also copied to the KDIC and SBM Bank Kenya.
The CBK’s position has left Chase Bank employees in the dark over the future of their stake in the lender.
The bank, inclusive of its subsidiaries Rafiki Microfinance Bank and Chase Assurance Agencies Limited, had 1,422 permanent employees at the end of 2014 as per the information memorandum published before it issued a bond in April 2015.
The GCR note indicates that the Esop held 429.621 shares before the additional investment was made in 2015, representing 4.3 per cent of the lender’s total shareholding.
This stake ranked the employees eighth largest in the lender’s shareholding structure.
The bank’s list of biggest shareholders includes Amethis Finance, German fund DEG, European Investment Bank and Zurich-based asset management firm Responsibility Participations AG.
SBM Holdings chairman Kee Chong Li Kwong Wing said in Nairobi at a press briefing on April 24 that SBM will absorb all of Chase Bank’s staff estimated at 1,300 in about 62 of its branches.
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