Chase Bank is in trouble, and it is not because some malicious competitor is spreading malicious rumours against the customer centric bank as many in the social media have alleged, but the stepping down of the bank’s chairman Mr. Zafrullah Khan and the bank’s MD Mr. Duncan Kabui confirm that indeed the Chase Bank troubles are true.
CHASE BANK chairman Zafrullah Khan & Group MD Duncan Kabui step down following understatement of insider loans; Paul Njaga remains CEO.
— NationBreakingNews (@NationBreaking) April 6, 2016
News in major news outlets aired at around one O’clock were to the effect that CBK Governor had advised Kenyans to ignore rumours doing rounds in social media platforms that Chase Bank had collapsed. However, the same Governor was reported to have ignored to comment on Chase Bank questions at a press conference where he addressed the current state of the financial sector, giving credence to the speculations that Chase Bank had collapsed was true.
Roughly two hours afters after the CBK Governor advised Kenyans to ignore the Chase Bank rumours, Nation Breaking News tweeted that the bank’s chairman and MD had stepped aside following understatement of insider loans. The alleged malicious rumours were fueled by the fact that in 2015, Chase Bank reported a loss of shs 742 million, despite having recorded a shs 2.3 billion in profits the previous year.
The shs 742 million loss has been attributed to non-performing loans and this in turn has been blamed on weak lending policies and management failure. To strengthen the lending policies, CBK Governor Dr. Patrick Njoroge said that CBK will implement stringent checks including IT audits that will ensure a reduction in the non-performing loans.
In the last three years, several banks including Dubai Bank, Imperial Bank, and recently National Bank and Chase Bank have been in the limelight all for the wrong reasons. In November last year, CBK issued a moratorium that put on hold licensing of new commercial banks until further notice. This was done in order for the CBK to to audit the operations of commercial banks, and it seemed the licensing regime was the problem as it allowed for banks to be improperly registered and operated.
Many Kenyans seem scared about the future of the banking industry in Kenya and hopefully CBK will move fast to bring order to the sector to avoid total collapse of the sector. We can only but hope that the 7 banks that Governor Njoroge mentioned as controlling 90 percent of Kenya’s liquidity are safe.