Chase Bank clients take out Sh1.6bn in three days
What you need to know:
- A run on the bank triggered by adverse publicity following exit of two directors and revelations of insider lending, forced the bank to close its doors on April 7, 2016.
- Mr Mohammud told the Benjamin Lang’at-led committee that KDIC had managed to recover assets worth Sh8 billion that were irregularly obtained from the bank. The assets are in the custody of the deposit insurance corporation.
Chase Bank customers withdrew a total of Sh1.6 billion in the first three days of its re-opening against deposits of Sh100 million in the same period, the Central Bank has told MPs.
The Kenya Deposit Insurance Corporation (KDIC), an agency of the Central Bank appointed as the official receiver of Chase Bank, told MPs yesterday that the lender’s clients withdrew slightly over Sh1 billion on Wednesday, Sh400 million on Thursday and Sh200 million on Friday.
“On reopening, the depositors continued transacting with the bank and withdrawals dropped by 70 per cent the following day,” KDIC acting chief executive officer Ahmed Mohammud told the National Assembly Finance, Planning and Trade committee yesterday.
He said the lender will from today clear cheques and real time gross settlement systems (RTGS) through the Kenya Commercial Bank (KCB) which was appointed as the receiver managers.
Mr Mohammud said the KDIC talked to big depositors not to withdraw their money, adding that they have agreed to continue transacting with the troubled lender.
A run on the bank triggered by adverse publicity following exit of two directors and revelations of insider lending, forced the bank to close its doors on April 7, 2016.
Mr Mohammud told the Benjamin Lang’at-led committee that KDIC had managed to recover assets worth Sh8 billion that were irregularly obtained from the bank. The assets are in the custody of the deposit insurance corporation. “We will be pursuing the directors for insider lending and ensure that all loanees pay back the money,” said Mr Mohammud.
He said KDIC relied on the expertise of KCB in re-opening the small and micro enterprise lender. “We are riding on their (KCB) expertise,” said Mr Mohammud.
KDIC said it was monitoring the Chase Bank’s operations and would make a decision on when to lift the cap on withdrawals once the lender returns to sound financial footing.
