Kenya's KCB Open to Banking Deals After Third Lender Collapses

  • KCB says it's open to consolidation in banking sector
  • Central bank offers to help lenders in wake of Chase closing

KCB Group, Kenya’s biggest lender by assets, said it has an interest in new market opportunities after a local newspaper reported it may be among potential buyers of Chase Bank Kenya Ltd., which collapsed last week.

“KCB is open to the potential consolidation in the market, but nothing specific has been pinned down,” KCB spokeswoman Judith Odhiambo said in an e-mailed response to questions. “We continue to pursue various options and opportunities and cannot specifically discuss a particular entity.”

Business Daily, a Nairobi-based newspaper, reported earlier on Monday that KCB is one of at least five companies interested in buying Chase Bank. The list includes Equity Group, Centum Investments Ltd., Commercial Bank of Africa Ltd. and I&M Holdings Ltd., it said.

Chase Bank collapsed last week after a run by depositors. It’s the third Kenyan lender to be seized by the authorities since Patrick Njoroge was appointed governor of the central bank in June. Imperial Bank Ltd. was taken over by the regulators in October, while Dubai Bank Kenya Ltd. went into liquidation in August after running out of money.

‘Liquidity Pressures’

The central bank placed Chase Bank in receivership on April 6, a day after the lender’s chairman and group managing director resigned when it announced restated earnings with a qualified opinion by auditors. On Sunday, Njoroge announced the regulator would provide support to banks facing liquidity constraints because of the “anxiety” caused by Chase’s closing.

“We will avail a facility to any commercial or microfinance bank that comes under liquidity pressures arising from no fault of its own,” Njoroge said in a statement e-mailed by the bank. “We will avail this facility for as long as is necessary to return stability and confidence to the Kenyan financial sector.

Smaller banks in Kenya are starved of liquidity, with seven of the nation’s 42 institutions holding 80 percent of the financial system’s cash, according to the regulator. At the same time, they’re also having to struggle against an increase in non-performing loans with not enough money set aside to cover them.

Arrest Warrants

On April 8, the police ordered the arrest of Chase Bank Chairman Zafrullah Khan and Group Managing Director Duncan Kabui. It also asked for the detention of six other directors from state-owned National Bank Ltd. who were placed on forced leave last month pending an internal audit.

I&M CEO Arun Mathur didn’t immediately return a call by Bloomberg requesting comment. Calls to Equity CEO James Mwangi’s mobile phone didn’t connect. Centum didn’t immediately respond to e-mailed questions and Commercial Bank of Africa denied it’s interested in Chase.

“We are not in discussions,” CBA Group Managing Director Isaac Awuondo said by phone. “We have not evaluated the opportunity.”

Shareholders in Chase Bank include Amethis Finance, a Paris-based company focused on investing debt and equity in Africa, responsAbility Participations AG, a Swiss investment company known as rAP, and KfW, the German development-finance group, according to an April 2015 document published on the lender’s website.

Amethis, responsAbility and KfW didn’t immediately respond to e-mailed requests for comment.

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