Kenyan Central Bank Agrees to SBM’s Offer for Chase Bank

NAIROBI (Capital Markets in Africa) – Kenya’s central bank said it agreed to a deal in which SBM Holdings Ltd., the second-biggest lender in Mauritius, will purchase some assets of distressed Chase Bank Ltd. 

The offer will ensure the transfer of 75 percent of the value of deposits that had been locked in receivership and the retention of staff and branches of Chase Bank, which went under in April 2016. The lender has been under the administration of the Kenya Deposit Insurance Corp.

The central bank and KDIC saw SBM’s binding offer as a “viable proposal” in the resolution of Chase Bank’s woes that will benefit depositors and help strengthen Kenya’s financial industry, according to an emailed statement by the two agencies.

“It is not an outright purchase of financial assets and/or liabilities where value can be easily assigned in alignment with the market value,” Moses Harding, adviser to the board of directors and group lead executive, said in an emailed response to questions. “It is a complex structure where the potential value can only be determined in the future.”

The transaction could be delayed after a Dubai-based lender, United Bank Ltd., and its London-based unit sought a temporary injunction against any deal on the sale or disposal of assets, the Nairobi-based Business Daily newspaper reported Friday, citing court documents. The two are claiming 1.1 billion shillings ($10.7 million) in letters of credit issued in 2015 and 2016. The central bank didn’t immediately respond to queries on the court case.

It shortlisted SBM along with Paris-based Societe Generale SA in October to bid for Chase Bank. A month earlier, SBM acquired Nairobi-based Fidelity Commercial Bank Ltd.