Corporate News
By DAVID HERBLING, hdavid@ke.nationmedia.com
Chase Bank was on April 7, 2016 unexpectedly placed
under receivership saddled by a liquidity crisis arising from a run on
the mid-sized lender by panicked depositors.
The Central Bank of Kenya (CBK) later appointed KCB as receiver manager, paving the way for the bank’s reopening on April 27, 2016.
A due diligence report detailing the financial
health of Chase Bank was due to be handed over to the CBK on August 31,
marking a homestretch for its sale to a strategic investor.
The Business Daily talked to Paul Russo,
the KCB group human resource director who is also the Chase Bank
receiver manager, on the status of the mid-sized lender and its path to
full recovery.
It’s now more than four months since Chase
Bank reopened, please give us a snapshot of what the bank looks like
from the inside in terms of new accounts opened or closed, amounts
deposited, amount withdrawn, total cash transacted.
As at August 30, 2016 the total inflows (mix of
deposits and transactions) was at Sh18.7 billion. The number of new
accounts opened is at more than 4,500.
Some of the milestones we have achieved since
reopening on April 27, 2016 include allowing small depositors to access
up to Sh1 million, activating ATM services, real-time gross settlement,
limited lending for trade finance services up to Sh5 million, restoring
VISA services and correspondent banking with Deutsche Bank.
KCB is set to earn a management fee as receiver manager. How much is this and how is it calculated?
The computation is on a direct cost basis and
largely based on direct cost of staff deployed during the period of
management contract. KCB bills purely on direct cost. We had 117 members
of staff at the beginning and have since scaled down to six.
What is the current liquidity position of
Chase Bank given the lender was closed for being unable to meet its
obligations? What is the liquidity ratio? Cash held at CBK?
I can confirm that Chase Bank’s liquidity has
improved significantly since reopening. At the moment, the bank is
exempt from reporting under receivership but I am aware that this
remains a matter of interest to various stakeholders. In due course and
at the appropriate time, the CBK will be in a position to share the
details.
What is the latest financial health of Chase Bank in terms of loan book size, deposits, net profit, and capital adequacy ratios?
Chase Bank’s financial health is certainly
improving. The commitment of the customers and dedication of Chase Bank
staff has been phenomenal. I remain positive about Chase Bank’s future
prospects.
Which services are yet to resume at Chase Bank?
We have resumed all services — term deposits,
lending, all off-balance sheet support, credit cards, transactions on
point of sales services, all 62 branches open and running, mobile to
bank and agency banking.
KCB remains interested in being part of the future of Chase Bank through an independent and transparent process.
Why did you send home a number of Chase Bank top managers (HR, risk, legal, credit, COO, business development)?
As with any organisation, employees are at liberty
to leave an employer and seek new opportunities that are a fit with
their career objectives. In this case, there was nothing out of the
normal in the separation process. It was mutual separation.
Who is the statutory auditor for Chase Bank? Does Chase Bank have audited results as of June 30? Have they been published?
My understanding is that the law provides for an
annual audit when in receivership. A plan is under way to appoint a
suitable audit firm to undertake the requisite audit.
There have been queries on your background as HR person to be receiver manager. How do you respond to this?
Reopening Chase Bank was all about people. Running a
bank is about two things: people and technology. Chasers (as Chase Bank
customers are fondly known) are not typical bankers.
If you brought in a traditional banker, they would
not understand the culture. I’m confident that in future CEOs will be HR
professionals.
We know how to motivate people to deliver strong
results. People don’t understand my background and experience. I worked
at Barclays for 14 years on multiple projects across many countries. I’m
a change management professional.
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