NSE’s seventh largest trader in focus as Chase Bank collapses

Genghis Capital staff launch its Unit Trust Fund in April 2013. Photo/FILE 

By GEOFFREY IRUNGU, girungu@ke.nationmedia.com

In Summary

• “We are engaging with the board and management of Genghis to assess the impact of the developments at Chase Bank (Kenya) Limited on the operations of Genghis in the interest of the investing public,” said the CMA in response to queries from the Business Daily.
• Though the CMA did not disclose the details of the other exposures at Chase Bank, as an investment bank Genghis Capital serves as an adviser on raising financial capital, underwriters, fund manager or as the clients agent in the issuance of securities.

The Capital Markets Authority (CMA) is assessing the impact the closure of Chase Bank will have on Genghis Capital which insiders say has put as much as 80 per cent of the deposits in the failed lender.

Genghis was the seventh largest player in the market last year with five per cent share in equities and bonds sales.

Regulators, including the Central Bank of Kenya (CBK) and the CMA, have gone out of their way to shield companies associated with the collapsed bank — emphasising they are legally separate entities — with a view to avoiding any contagion effect.

The CMA is said to have visited Genghis a week ago in a bid to assess its operations and met its management and board. The board is said to have held a meeting that took hours last week as it evaluated its options.

Companies associated with Chase Bank — including Genghis Capital, Chase Assurance and Rafiki Microfinance Bank — are seen as possible victims of the lender’s fall.

Asses the impact

“We are engaging with the board and management of Genghis to assess the impact of the developments at Chase Bank (Kenya) Limited on the operations of Genghis in the interest of the investing public,” said the CMA in response to queries from the Business Daily.
The CMA said that investors had no adverse exposure in the settlement for trades in securities.
“With regard to the settlement of trades in securities, the Authority in coordination with the Central Depository and Settlement Corporation has ensured that there have been no and will be no settlement exposures to the market notwithstanding the placement of Chase Bank in receivership,” said the CMA.

READ: Another protracted battle looms with Chase Bank closure

Though the CMA did not disclose the details of the other exposures at Chase Bank, as an investment bank Genghis Capital serves as an adviser on raising financial capital, underwriters, fund manager or as the clients agent in the issuance of securities.

They also facilitate investors to buy and sell securities as well as trade on their own account. This could mean that the investment bank had put at least some of its cash in the collapsed institution.

Genghis is also a Central Depository Agent (CDA) registered by the CDSC to carry out services including assisting customers with opening of Central Depository System accounts (CDS) for shares and corporate bonds held by an investor.

“The CMA and CDSC would like to clarify that the securities held in the respective CDS accounts by any CDA, including Genghis in respect of customers are in the custody of the Central Depository and Settlement Corporation (CDSC) and not the CDA itself. Investors are, therefore, assured that their securities are in safe custody,” said the CMA.