Kenya Deposit Insurance Corporation has been given the mandate to manage Chase bank until it gets back to its feet. This comes after chairman Zafrullah Khan and Managing Director Duncan Kabui stepped aside from their positions following the release of the company’s 2015 earnings. The published results showed that insider loans — money advanced to directors, shareholders, associates and employees of the bank — stood at Sh13.62 billion last year against the Sh5.72 billion it reported on March 31.
Therefore, KDIC has been appointed in the interest of depositors, creditors and the public. This is provided under Section 43(2) of the Kenya Deposit Insurance Act, 2012. The stipulation requires the Central Bank of Kenya to appoint the regulator to act as a manager for a given period of time if a bank is unsafe or unsound condition to transact exists. Other conditions may be if a bank is likely to fail to meet its financial obligations, a bank has substantially insufficient capital or if there is a violation of nay law.
“Chase Bank experienced liquidity difficulties following inaccurate social media reports and stepping aside of two directors, consequently it was not able to meet its financial obligations on April 6, 2016,” CBK said in a press statement.
“In light of the above, CBK has appointed the Kenya Deposit Insurance Corporation to assume the management, control and conduct of the affairs and business of the institution,” the authority said.
Today, many people visited the bank either to withdraw their money or get an assurance from the bank’s management that their money is safe. The banking sector is a lucrative field that has been occupied by many institutions that face internal mismanagement; Chase Bank among other banks is a victim.
After “malicious and irresponsible” comments made rounds on social media, the bank wrote,”the board would like to reassure all its customers, partners and the general public that Chase Bank is a strong, sound and transparent institution that has operated in Kenya for the last 20 years.”