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Africa Economy: Kenya mulls merger under acquisition for collapsed bank

Xinhua, April 16, 2016 Adjust font size:

The Central Bank of Kenya (CBK) is evaluating five new offers from potential buyers as it plans the re-opening of Chase Bank, a middle-tier bank under statutory management for failing to meet the credit demands of its depositors.

CBK Governor Patrick Njoroge said the Chase Bank's assets could be identified and sold while shareholders and directors also expressed willingness to move quickly and resolve the outstanding matters.

"There is interest by five local and foreign interests on the bank. The Bank must remain open if it re-opens not just for three weeks. Our objective is to re-open the Bank as soon as possible. We are evaluating the offers," Njoroge told reporters in Nairobi.

Chase Bank's closure caused panic in the local financial markets when the Central Bank sent executives from the Kenya Deposit Insurance Corporation accompanied by the police to take over the bank.

A mid-tier lender with 62 branches across Kenya, mostly serving corporate, retail and small and medium enterprises, Chase Bank suddenly failed to meet its depositors' demands for cash, leading to its closure.

Njoroge said even though the Central Bank was being blamed for the sudden collapse of the Chase Bank, it was not the responsibility of the apex bank to run the commercial banks.

"There is strong and positive assessment from the Kenya Bankers Association (KBA), the African Development Bank (AfDB) and Moodys, a global credit rating agency and they have all confirmed the sector remains strong," Njoroge said during a news briefing on the status of the banking sector.

The CBK did not provide details on the planned acquisition or merger of Chase Bank but local bank, the Kenya Commercial Bank (KCB), the country's largest bank by assets, has expressed an interest in owning stakes in the Bank.

KCB Managing Director Joshua Oigara confirmed in an interview on a local television channel his bank was willing to play a role in the revival of Chase Bank without providing details.

The Governor said it was still premature to reveal the identities of the firms eyeing a stake on Chase Bank for fear such revelations may jeopardize the ongoing talks and delay the re-opening of the Bank. Endit