KCB acquires Chase Bank setting the stage for Chase Bank to reopen three weeks after it was placed under receivership. This comes after Central Bank of Kenya (CBK), Kenya Deposit Insurance Corporation (KDIC) and Kenya Commercial Bank (KCB) reached an understanding on modalities of how KCB will manage Chase Bank pending full reopening of the troubled bank in a future date. Even has KCB prepares to take the management of the bank, news reaching several business sites by yesterday was to the effect that Qatar National Bank (QNB) had beaten KCB and another bank in the bid to buy off Chase Bank. However, sources close to the negotiations have since claimed that CBK Governor was not in favor of QNB despite political leadership preferring QNB to take over Chase Bank.
According to Business Today, by yesterday KCB was third from four bids that Central Bank of Kenya received for the purchase of Chase Bank. The same article states that the “Qatari lender, QNB, which is the second largest bank in Africa and the Middle East, was the front runner to take over Chase Bank.” Following the widespread news that QNB had beaten everyone in the quest to take over Chase Bank, Kenyans took to Twitter to express their disappointments and frustrations, claiming that a bank like Qatar National Bank cannot be trusted to manage hard earned money by Kenyans. Qatar National Bank is one of the banks that handled the $2 billion Eurobond loan.
Despite the widespread news that QNB was the bank to manage Chase Bank, this morning Kenyans were surprised when CBK announced that it is Kenya Commercial Bank that will take over the management of Chase Bank. The overnight turnaround surprised us, forcing us to make a few enquiries on why CBK could have a change of heart overnight. According to sources privy to the Chase Bank negotiations, certain political leaders were pushing for the QNB to buy Chase Bank, while CBK Governor had preferred Kenya Commercial Bank from the very beginning.
Reasons CBK Governor had preferences for KCB were founded on trust. According to our source, CBK Governor held to the opinion that selling Chase Bank to an unknown foreign bank would cause jittery among Kenyans, and once Chase Bank reopens under a bank that is largely unknown, Kenyans would still rush and withdraw all of the remaining cash that would again lead to the bank’s collapse or slow down.
The political leadership on the other hand continued to lobby for Qatar National Bank, reasoning that if the bank acquires Chase Bank, then Kenya would stand a better chance to access foreign credit like the Eurobond and similar loans. The push and pull continued for days until the political leaders gave up despite managing to push for QNB to be the best bidder. Even though KCB did not offer an immediate buy out proposal for Chase Bank the same way QNB did, CBK still managed to push for KCB, a push that culminated in KCB being declared the new Chase Bank Manager.
It is very commendable for CBK Governor to have held his ground against the powers that be. If the politicians had their way, Chase Bank could have gone to a bank that is linked to Eurobond, a loan that has raised many questions than there are answers. Qatar National Bank also has been in the International news over the past hour all for the wrong reasons: its Database was hacked and customer information posted online. If it succeeded in acquiring Chase Bank, then this hacking scandal could not have gone well both for the Government and CBK just hours after the acquisition. Here is the full database of QNB customer information.
The boardroom push and pull between CBK and the unnamed politicians are now over, giving way for KCB to reopen Chase Bank on 27th April 2016. As Chase Bank reopens, depositors will be allowed to access their deposits for up to shs 1 million, and those with more than shs 1 million will have to wait until structures are put in place on how and when they can access their monies. Well done CBK Governor.