Central Bank of Kenya Governor Patrick Njoroge
Chase Bank will reopen on Wednesday. And the Central Bank of Kenya (CBK) made a strategic decision that will keep the bank afloat, even if all small depositors withdraw all their money. A breakdown of the fallen bank's depositors shows a very small number of depositors (three per cent) control virtually all deposits, each holding more than Sh1 million in their respective accounts. These depositors had a firm grip on the total deposits at Sh94 in every Sh100 at the point the bank collapsed two weeks ago. Such customers will access a maximum of Sh1 million, deflating any possibility of a significant shock. In contrast, the average customers, who constitute 97 per cent of the clientele, are jointly owed less than Sh5.8 billion – an amount too small to shake the bank in the event that it was all withdrawn in an instant. "The bank had a high concentration of professionals including law firms, non-governmental organisations and small businesses as depositors," CBK Governor Patrick Njoroge said, before unveiling Kenya Commercial Bank as the interim manager and eventual buyer of Chase Bank. Among the biggest depositors are State agencies and saccos, who have vast cash reserves at any point in time.
Chase Bank will reopen on Wednesday. And the Central Bank of Kenya (CBK) made a strategic decision that will keep the bank afloat, even if all small depositors withdraw all their money. A breakdown of the fallen bank's depositors shows a very small number of depositors (three per cent) control virtually all deposits, each holding more than Sh1 million in their respective accounts. These depositors had a firm grip on the total deposits at Sh94 in every Sh100 at the point the bank collapsed two weeks ago. Such customers will access a maximum of Sh1 million, deflating any possibility of a significant shock. In contrast, the average customers, who constitute 97 per cent of the clientele, are jointly owed less than Sh5.8 billion – an amount too small to shake the bank in the event that it was all withdrawn in an instant. "The bank had a high concentration of professionals including law firms, non-governmental organisations and small businesses as depositors," CBK Governor Patrick Njoroge said, before unveiling Kenya Commercial Bank as the interim manager and eventual buyer of Chase Bank. Among the biggest depositors are State agencies and saccos, who have vast cash reserves at any point in time.
President Uhuru and Raila in new hot exchange over Eurobond billions Raila: It’s now clear Eurobond money is lost CBK Governor Njoroge declines to meet Raila over Eurobond Chase Bank was offering what could be the most attractive interest on term deposits, at about 10 per cent, to explain why it was the choice for rich customers. Dr Njoroge said CBK was confident that a run on the bank was an unlikely outcome when it opens its doors, drawing his assurance from the newly created kitty that is structured to ensure no lenders run into liquidity troubles. He added that all the 167,290 accounts that have Sh1 million and less were free to access all their funds. "I do not expect that to happen anyway," he said. In the unlikely event of a run on the bank, total exposure in withdrawals as contained in the structure is less than Sh6 billion. Earlier, CBK had indicated that Chase had about 55,000 depositors to suggest that each had at least three bank accounts, on average. KCB will operate the bank and is understood to be working on filling Chase Bank's cash vaults to take on the uncertainties surrounding the actual events when it re-opens. "KCB will provide a team of managers that will work under the watch of the receiver manager (Kenya Deposit Insurance Corporation) in offering the complete set of banking services and restoring credibility in our banking system," CBK boss said.
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