Social Media Rumours to blame on the collapse of Chase Bank, CBK says

Written by
  • 4 years ago
  • Posted: April 7, 2016 at 12:56 pm

After about 24 hours of Social Media rumours on the collapse of Chase Bank, Chase Bank finally closed. The decision to close the bank was made at 4 AM in a meeting between Central Bank of Kenya and shareholders of Chase Bank who agreed to inject liquidity in the bank to enable it resume operations as soon as possible. In the meantime, the Bank was put under receivership where it will be managed by Kenya Deposit Insurance Corporation.

Following the events that led to the collapse of Chase Bank, CBK Governor Dr. Patrick Njoroge held a press conference this morning from 10:30 AM to explain the Chase Bank troubles, and in the press conference the following revelations were made:

  1. That Chase Bank has been put under receivership for an indefinite period (or 12 months depending on the source of information).
  2. That Chase Bank had issued insider loans totalling to shs 8 billion in the last three months.
  3. That Chase Bank auditors issued disclaimer of qualified opinion, but were unable to give true picture of the bank’s accounts.
  4. That the auditors had concerns with Ksh 16.6 billion in loans in Chase Bank books.
  5. That yesterday’s depositors’ withdrawals from Chase Bank to the tune of Kshs 8 billion was so large for Chase bank to meet its obligations.
  6. That the decision to close Chase Bank was made after the unprecedented withdrawals; which were occasioned by the rumours in social media that Chase Bank had collapsed.
  7. That CHASE bank shareholders agreed to inject cash into the bank to allow its reopening as soon as possible.
  8. That it is still too early to talk about depositors’ refunds, that the focus now is to work with shareholders to rebuild the bank and reopen it.
  9. That Chase Bank had last week signed a Ksh 5 billion fund with Africa Development Bank, money that was yet to be disbursed to Chase Bank by the time of closing Chase Bank.
  10. That the timeline on when Chase Bank will resume operations is unknown, that that depends on shareholders capital injection. And,
  11. That Rafiki Microfinance is unaffected by Chase Bank closure as it is an independent institution.

The most powerful revelation made by the CBK is that the Central Bank is blaming Social Media Rumours on the collapse of Chase Bank. According to Dr. Patrick Njoroge who heads Central Bank of Kenya, the fact that there were insider unsecured loans to the tune of shs 8 billion were not an issue, stating that Chase Bank woes are not as complicated as those of Imperial Bank, and that Chase Bank customers should not have been worried by such fraudulent transactions, and as such should have kept their social media mouths shut. Too bad for the Governor as Kenyans on Twitter (KOT) do not know how to keep their mouths shut when such sensitive information reaches them.

KOT has already picked on the woes of Rafiki Microfinance with reports doings round that depositors have lined up to capacity in Rafiki branches in Nairobi to withdraw their cash. Although Governor Njoroge is at pains explaining that Rafiki Microfinance is an independent institutions, word on the ground has it that depositors have decided to trust their mattresses instead of the money fleecing banks.

The troubles with Dubai Bank, Imperial Bank, National Bank of Kenya, Chase Bank and now Rafiki Microfinance have left many wondering whether Kenyans should still have trust on the banking sector. The question is, “how much damage did the previous CBK Governor do to the banking industry?”.

I personally blame the banking woes on the laxity Jubilee Government has on fighting graft both in public and private sectors. What these Board of Directors, CEOs, Chairmen and women, and MDs that have run down private and public institutions including KQ, Mumias, Uchumi and the Banks ought to be taught is the solitude of jail cells, the pinch of frozen assets, and the helplessness of bankruptcy. Suspending them when they still can afford their 5 and 7 star social status doesn’t teach them any lessons.

What is your opinion on the topic?
Odipo Riaga
Managing Editor at KachTech Analytics Ltd
Film Director, Tech and Business Blogger, Chess Player, and Photographer. God is Science.
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