Money Markets
A Chase Bank customer withdraws money from an ATM. The lender holds Sh412 million in Shelter Afrique deposits. PHOTO | FILE
By GEORGE NGIGI
Pan African housing lender Shelter Afrique has set
aside Sh80 million as provision for possible loss from the collapse of
Chase Bank.
Shelter Afrique held Sh412 million in Chase Bank before it
was put under statutory management on April 7 following a run on
deposits after the Central Bank of Kenya raised questions on insider
lending.
“At the time of receivership, Shelter Afrique held
deposits with the bank amounting to US$4,120,287 (Sh412 million). It is
expected that recovery from the Kenya Deposit Insurance Corporation
(KDIC) will not be in full. Consequently, a provision of US$800,000
(Sh80 million) has been made,” said the company in its annual report.
The KDIC has allowed Chase Bank customers to access
up to Sh1 million in deposits but is yet to open the window for large
corporates such as Shelter Afrique. The mortgage firm had also loaned
the bank Sh106 million for a seven-year period ending in 2020.
Chase Bank was earlier this month given regulatory
approvals to resume lending to customers and take fixed deposits,
raising hope of full recovery.
The lender had fixed deposits valued at Sh56.6
billion as at end of June last year underlining its attractiveness to
high net-worth individuals and companies.
Other companies whose cash is held up in the bank
include Kenya Ports Authority which had a fixed deposit of Sh2.9 billion
and regional insurance company ATI which was holding $2 million (Sh200
million).
The bank which was largely owned by international development financial institutions is currently being managed by KCB Group as the receiver manager.
The Central Bank of Kenya early this month said it
would next month pick a new investor to buy a majority stake in Chase
Bank as part of efforts to fully revive the lender.
This came after KCB said its role in reopening the
lender is almost complete, paving the way for the regulator to call for
bids from multiple investors interested in the buyout.
The KCB is expected to be among companies that will
bid for Chase Bank, whose model is focused on small and medium-sized
enterprises (SMEs).
Chase Bank could represent an attractive franchise with 27,000 customers, largely SME businesses.
It is also a banker to 341 non-governmental organisations and 147 savings and credit cooperative societies.
The KDIC has been optimistic of the bank’s
reopening noting it has opened over 3,000 new accounts while in
receivership. It said transactions worth over Sh6 billion have been
channeled through the lender since it was re-opened on April 27.
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