It’s undoubtable that closure of Chase Bank has had a significant impact on its subsidiaries and Investment Bank, Genghis Capital has been affected the most.
The stockbroker has said that its looking for strategic investors to inject new capital due to liquidity challenges following placement of its principal banker, Chase Bank, under receivership.
Genghis had held most of its cash with Chase owing to the cross-ownership with insiders estimating the investment bank had put as much as 80 per cent of its deposits in the failed lender that has just reopened.
“They are also in the process of identifying new investors to come in to further capitalise the business,” said Capital Markets Authority (CMA) chief executive Paul Muthaura in an interview on Wednesday.
“We have been working with them to make sure that even in the transition period they are making sure their responsibilities are being properly exercised. We have been holding meetings with receiver managers to ensure their abilities to exercise licensed activities continue,” said Mr Muthaura.
Related; CMA says securities held By Genghis Capital are in safe custody
Zaffrullah Khan, the deposed chairman of Chase Bank popularly known as Zafa at the lender, was also the chair of Genghis Capital and the sacked group managing director Duncan Kabui a board member.
The Central Bank of Kenya (CBK) seeks to recover more than Sh8 billion from the directors of Chase Bank who had reportedly irregularly disbursed insider loans to themselves.
Genghis Capital is licensed as the sole lender that can buy and sell bonds in the secondary market as well as underwrite issue of securities.
Source; Business Daily, CMA
Lesson;
Any time management does something that is irregular, off the beaten path, or just plain not expected, it should be a warning to any investor of any securities in the company. Something is definitely amiss here and investors would therefore be encouraged to watch from the sidelines rather than gamble on the outcome.
