Money Markets
Recently deposed Chase Bank chairman Zafrullah Khan who was also chair
of Genghis Capital. The CMA recently renewed GenCap’s licences after
assurances. PHOTO | FILE
By GEORGE NGIGI, gngigi@ke.nationmedia.com
In Summary
- Genghis Capital has been facing liquidity challenges following placement of its principal banker, Chase Bank, under receivership.
- The investment bank had put as much as 80 per cent of its deposits in the failed lender that has just reopened.
- Withdrawals at Chase Bank are currently capped at Sh1 million for deposits made before it went under, limiting cash available to Genghis Capital.
Investment bank Genghis Capital (GengCap), which
shares owners with the collapsed Chase Bank, is looking for strategic
investors to inject new capital.
It has been facing liquidity challenges following placement of its principal banker, Chase Bank, under receivership.
Genghis had held most of its cash with Chase owing
to the cross-ownership with insiders estimating the investment bank had
put as much as 80 per cent of its deposits in the failed lender that has
just reopened.
“They are also in the process of identifying new
investors to come in to further capitalise the business,” said Capital
Markets Authority (CMA) chief executive Paul Muthaura in an interview on
Wednesday.
Chase Bank does not list Genghis Capital as one of
its subsidiaries nor as an associate indicating the relationship is
based on common shareholders.
Zaffrullah Khan, the deposed chairman of Chase Bank
popularly known as Zafa at the lender, was also the chair of Genghis
Capital and the sacked group managing director Duncan Kabui a board
member.
The Central Bank of Kenya (CBK) seeks to recover
more than Sh8 billion from the directors of Chase Bank who had
reportedly irregularly disbursed insider loans to themselves.
It was not clear whether the directors’
shareholding in Genghis was part of what had been forcefully taken by
the regulator as collateral for the unsecured insider loans.
In a gazette notice released last Friday, the CMA
renewed Chase Bank’s investment licences despite it being under
statutory management.
The regulator defended the move noting the receiver managers (KCB) had given assurance of smooth operations.
“We have been working with them to make sure that
even in the transition period they are making sure their
responsibilities are being properly exercised. We have been holding
meetings with receiver managers to ensure their abilities to exercise
licensed activities continue,” said Mr Muthaura.
The bank is licensed as the sole lender that can
buy and sell bonds in the secondary market as well as underwrite issue
of securities.
Withdrawals at Chase Bank are currently capped at
Sh1 million for deposits made before it went under, limiting cash
available to Genghis Capital.
The investment bank, which is also licensed to
operate a trust fund, has sent out a circular to its clients stating the
bulk of cash held by GenCap Unit trust fund was held by Chase Bank
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