Kenya Regulators Help Investment Bank Free Funds Held in Lender

NAIROBI, Kenya, Capital Markets in Africa — Kenyan regulators are working with Genghis Capital Ltd. to help the investment bank free up cash locked in Chase Bank Kenya Ltd., an associated company which is being nursed back to health after collapsing following a run on deposits.

Authorities are collaborating with the caretakers of Chase Bank so that clients of Genghis wanting to redeem some of their mutual fund holdings can access their money, Capital Markets Authority acting Chief Executive Officer Paul Muthaura said in an interview in Nairobi on Thursday. They are separating some custody assets Genghis deposited with Chase Bank so that the company, which offers brokerage, investment and corporate finance services, can continue to meet its obligations as a licensed depository agent.

“Genghis has continued to be a trading participant” on the Nairobi Securities Exchange, Muthaura said. “Its investment banking license was not suspended because they were able to evidence to us their ability to continue to operate.”

KCB Group Ltd., Kenya’s biggest bank by assets, agreed to buy a majority stake in Chase Bank after reopening the lender, which was taken over by regulators on April 7, a day after its chairman and group managing director resigned as the company issued restated results that received a qualified opinion from auditors. All Chase Bank branches will open by April 27 and online and mobile-banking services will become available, the Nairobi-based central bank said in an e-mailed statement Wednesday.

While Genghis and Chase Bank have common shareholders, they operate independently, Muthaura said. “Not withstanding, a significant amount of assets held through Genghis, were held through Chase,” he said, without saying how much funds are involved. “We’re working with directors, management and shareholders of Genghis to look at ways to make sure they continue to operate their business.”

Ali Cheema, a director of Genghis, couldn’t immediately be reached for comment when contacted at his office in Nairobi on Friday, with his personal assistant saying he will respond to requests later in the day.

Source: Bloomberg News