Central Bank of Kenya (CBK) has today approved liquidation of Chase Bank, technically referred to as Chase Bank Limited in Receivership (CBLIR).
This approval will make Chase Bank cease to exist.
The Kenya Deposit Insurance Corporation (KDIC) recommended to dissolve the bank of the the lender’s statutory/receiver manager since April 2016.
“CBK has assessed the recommendation by KDIC, and considered that liquidation would facilitate the orderly resolution of the residual assets and liabilities of the bank,” the CBK said in a statement.
The CBK has agreed with KDIC’s view on the weakened financial and liquidity status of CBLIR which has left liquidation as the only option on the table and has also appointed the KDIC as liquidator of CBLIR.
According to the statement, KDIC will release information about the liquidation of CBLIR and payment of depositors in due course.
On April 7,2016, CBK appointed the KDIC as a receiver for Chase Bank Limited for a
period of twelve months, pursuant to the provisions of Sections 43(1), 43(2) and 53(1) of the Kenya Deposit Insurance Act, 2012.
According to a statement by CBK, the appointment of KDIC as a receiver for Chase Bank Limited had been carried out in the interest of its depositors, creditors and members of the public.
“Section 43(2) of the Kenya Deposit Insurance Act, 2012 requires CBK to appoint the
KDIC as a receiver of a bank, if, among others, an unsafe or unsound condition to
transact exists; a bank is likely to fail to meet its financial obligations; a bank has
substantially insufficient capital or if there is a violation of any law or regulation,” read CBK statement.
One of CBK’s primary role as a regulator is to foster the liquidity, solvency and proper functioning of a stable market-based financial system.
Further, Chase Bank experienced liquidity difficulties, following inaccurate social media reports and the stepping aside of two of its directors.
“Consequently, it was not able to meet its financial obligations on
April 6, 2016. In light of the above, CBK has appointed the KDIC to assume the management, control and conduct of the affairs and business of the institution and to exercise all the powers of the institution to the exclusion of its Board of Directors and advise CBK of an appropriate resolution strategy as soon as is practicable and not later than twelve months from date of appointment,” stated CBK.
The regulator noted that KDIC was to release information on the progress in due course.
