KDIC opens payments to Chase, Charterhouse bank depositors

The Kenya Deposit Insurance Corporation (KDIC) has opened payments to depositors in Chase and Charterhouse banks following the nod on the lenders’ liquidation. Depositors of Chase Bank Limited in Liquidation have for instance been directed to lodge their claims to the KDIC through forms available across SBM bank branches from Tuesday. Depositors with approved claims will subsequently have their payments processes through Real Time Gross Settlement (RTGS). The depositors will immediately receive payments of up to Ksh.500,000 representing the insured deposits cover while the balance alongside creditors claims will be paid at the culmination of the liquidation process. At the same time, KDIC is expected to pay out insured deposits in Charterhouse bank at the end of 30 days having commenced a review of the bank on Monday. “We have just moved in this morning and we are going to take a deep dive into the bank to establish other assets, trace, preserve and realize the assets at the best market value for the benefit of depositors and creditors,” said KDIC Chief Executive Officer Muhamud Muhamud. About 85 per cent of all Charterhouse depositors or 8 out of every 10 depositors in the bank will be fully compensated under insured deposits, meaning the clients have less than Ksh. 500,000 in deposit claims. Balances owed by the bank to other depositors and creditors will meanwhile be paid out after the tracking and disposal of the bank’s outstanding assets. Only three percent of original depositors in Chase Bank are yet to be compensated. The bulk of depositors have fully accessed their funds following the carving out of 75 per cent of the bank’s assets by SBM in August, 2018. On April 16, the Central Bank of Kenya (CBK) approved the liquidation of Chase bank as a last resort measure to salvage value for shareholders in the bank. The bank was placed under receivership on April 7 in 2016 after a run of the bank a day earlier which saw customers make panic withdrawals on unconfirmed reports that surfaced on social media wiping out the lender’s liquidity. Last Friday, the CBK saw the same outcome for Charterhouse bank, which was put on statutory management in June of 2006, sending the lender into liquidation. KDIC expects the upcoming roll out of risk based insurance premiums by banks to deter rogue lending prices which have in the past triggered bank failures. “We are working on a risk based premium which will be another level of defense for depositors. Banks will be careful not to play around as they will be penalized by paying higher premiums,” added Mr. Muhamud.

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