Mauritius-based SBM Holdings Limited through SBM Bank (Kenya) Limited has finalised the transaction to obtain “carved out assets and assumption of specific liabilities of Chase Bank Kenya Ltd (in receivership) (CBLR).” This is according to a joint statement from SBM Bank Kenya and the Kenya Deposit Insurance Corporation (KDIC).
SBM Bank Kenya Limited has obtained liabilities which include 75 per cent of deposits under moratorium and 100 per cent non-moratorium deposits. The assets the bank has acquired include loans, some branches, staff, systems, and liquid assets.
What remains in CBLR are 25 per cent of moratorium deposits, loans and deposits subject to court cases, and the remaining assets.
Chase Bank’s Receivership
The Central Bank of Kenya (CBK) placed Chase Bank Limited in receivership on April 7, 2016, and the KDIC subsequently appointed Kenya Commercial Bank (KCB) as the receiver manager.
Chase Bank was then partially opened on April 27, 2016, while still in receivership, where 96 per cent of depositors were able to access their deposits up to a maximum of Sh1 million. In addition, the bank continued to accept deposits, an indication of depositors’ confidence.
KDIC and CBK invited investors to take an equity interest in CBLR through an expression of interest on March 30, 2017. On 5 January 2018, the two institutions “announced the receipt and acceptance of a binding offer from SBM Holdings.”
The Transition Phase
The now finalised transaction is in the transition phase for 30 days which will involve the transition of the majority employees and the agreed carved out assets and liabilities from CBLR to SBM Bank Kenya. Moreover, this phase will see the IT system, select branches, and other distribution networks move to SBM Bank Kenya.
The transition phase will also involve the rebranding of all branches and distribution networks to SBM Bank Kenya.
The joint statement reads:
“The transition process will be completed on Friday the 17th August 2018 in line with the CBK Gazette notice. On completion of the transition period, the combined entity will open its doors on Monday the 20th August 2018 offering full banking operations.”
KCB will remain a part of the transaction team until the final handover is completed on August 17 this year.
The Impact
Chase Bank customers now enjoy full bank services under SBM Bank Kenya when the bank opens on August 20. Customers will be able to access 50 per cent of funds transferred to SBM while the remaining 50 per cent of the transferred moratorium deposits will be available over the next three years inclusive of interest earned during this period.
Furthermore, the employees that will move to SBM Bank Kenya will enjoy several benefits such as staff benefits in accordance with the bank’s internal policies and career opportunities within SBM Group.
“The conclusion of the transaction and the handing over of a large portion of CBLR to SBM Bank (Kenya) Ltd will have a positive impact on the financial sector. Customers will have access to new and refreshed banking services offered by SBM Bank (Kenya) Ltd,” the joint statement says.
Post-transaction, SBM Bank Limited will move from a tier 3 bank to tier 2 while SBM Group will inject an extra $60 million bringing its total Kenyan entry investment to $86 million.
“SBM Bank (Kenya) Ltd is keen to explore collaboration with Group entities and other banks locally on large corporate transactions. The bank looks forward to building winning relationships with other financial institutions in Kenya to provide beneficial financial solutions to the business sector,” the joint statement reads.
