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Kenyan lender placed in receivership after liquidity crunch

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Kenyan lender placed in receivership after liquidity crunch

The CentralBank of Kenya said April 7 that it placed under themanagement and control of the Kenya Deposit Insurance Corp. for 12 months.

The central bank said the lender faced "liquiditydifficulties" following "inaccurate social media reports" andthe departure of twoof its directors, and was therefore unable to meet its financial obligationsApril 6. As receiver, the Kenya Deposit Insurance Corp. willassume the management, control and conduct of the affairs and business of thebank, and will exercise all the powers of the institution to the exclusion ofits board of directors.

The Kenya Deposit Insurance Corp. will also advise thecentral bank of an appropriate resolution strategy as soon as is practicableand not later than 12 months from the date of appointment.

Chase Bank said April 6 that Chairman Zafrullah Khan andManaging Director Duncan Kabui stepped down after the lender restated itsfull-year 2015 financial results to reflect, among other things, a far highertotal of loans to insiders.

The lender is the third to be placed under receivershipsince Patrick Njoroge was named central bank governor in mid-2015, BloombergNews noted April 7. Njoroge told reporters in the Kenyan capital Nairobi thatthe central bank expects Chase Bank's shareholders to inject liquidity to allowthe bank to reopen, according to the report.

Njoroge added that withdrawals April 6 were "completelyout of the ordinary" but that the Chase Bank case is not like that ofImperial Bank Ltd.,which has seen senior managers accused of fraud.