The shake-up of top management at Chase Bank has stoked rumours that all is not well in its vaults. The bank’s board forced the chairman and Managing Director Zafrullah Khan and Duncan Kabui, respectively, have been forced to resign after the surprise Ksh792 million loss for 2015, down from a profit of over Ksh4 billion the previous year.
Mrs Muthoni Kuria was named board chairperson but Paul Njaga will continue as the chief executive officer. Reports that the bank is reeling in financial trouble have generated a lot of interest on social media but in a statement, Chase Bank assured its customers that their funds and investments were safe.
According to some social media postings, there is a possible run on the bank which the management is countering by asking customers to wait for as long as 72 hours to make withdrawals.
“The board would like to reassure all its customers, partners and the general public that Chase Bank is a strong, sound and transparent institution that has operated in Kenya for the last 20 years,” Ms Kuria said in a statement. “ The shareholders of the bank who count among the world’s leading institutional investors from Germany, France and Switzerland have fully supported the changes, and remain committed to the partnership with the bank.”
The bank got a much-needed endorsement from Central Bank of Kenya when the Governor, Dr Patrick Njoroge, dispelled rumours that Chase Bank is in distress, terming the rumours collapse rumours as ‘malicious’ and untrue”. “Can you shout fire in a theatre?” posed the Governor.
Bank restated financial results
The bank is among those reeling from bad debts, which is a major concern for the Central Bank of Kenya as there are inadequate funds to cushion them, with Dr Njoroge saying non-performing loans rose to 6.8 percent of total credit in February 2016 from 5.7 percent a year earlier.
The fears could be traced to Chase Bank’s restated financial results released on Tuesday that indicated total contingent liabilities of Sh26.6 billion as of December 31, 2015, compared with Sh13.2 billion in 2014. On March 31, it reported liabilities of Sh13.2 billion versus Sh25.8 billion a year earlier. Loans to employees and directors in 2016 amounted to Sh13.6 billion versus the Sh3.24 billion reported last week.
Yesterday, Njoroge said CBK will audit all banking systems across the board even as Chase Bank, which last Friday revealed it had received a Sh5 billion on-lending facility from the African Development Bank (AfDB) to support its growth strategy as it issued its results, remained upbeat.
Chase Bank is one of the leading commercial banks lending to business owners operating small and medium sized enterprises.
“In 2015, the bank lent excess of Ksh22 billion to small businesses out of a loan book of Ksh103 billion. The bank is ranked 11th in terms of balance sheet size in the Kenyan banking industry with assets valued at Kes 143 billion. Its core capital stands at over Ksh11 billion as at December 31, 2015. Chase Bank counts on several strategic institutional investors to support its socially inclusive growth plans. We would like to reassure the general public that our customers’ funds and investments are safe,” the statement added.
Mrs Kuria has served on the Board for over three years. She is a career banker and certified public accountant. She holds an MBA and serves on other boards. Mr Njaga has been the bank’s CEO of Chase from December 2014. He is a career banker having worked with BNP Paribas and as Chief Finance Officer at Equity Bank. He is a certified public accountant with an MBA in Finance.
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