KDIC Starts Paying Charterhouse Bank Fall Depositors
The state began the process of paying depositors who had up to 500,000 shillings in the Charterhouse Bank collapse, ending a 14-year freeze that had bothered thousands of savers.
The Kenya Deposit Insurance Corporation (KDIC), the bank’s liquidation oversight agency which was put under statutory management in June 2006, required depositors to complete payment forms from June 3.
The lender, which then had 2.9 billion shillings in 4,699 accounts, was shut down in what the Central Bank of Kenya (CBK) called a “serious violation of banking law”.
The CBK said the violations were related to loans, the accuracy of financial statements, the inability to obtain account opening documents for a number of clients and money laundering.
Notice is issued upon commencement of payment of Protected Deposits to all eligible depositors of Charter House Bank LTD (in liquidation) in accordance with Section 33 of the KDI 2012 Act, ”KDIC said in a statement yesterday.
KDIC’s immediate payment will leave about 705 accounts pending for the proceeds of the liquidation of a bank that had an asset base of 4 billion shillings and a loan book of 2.9 billion shillings.
The agency says the next step after paying the insured deposits will be to go after the bank’s assets, including suing businesses and individuals who had taken out loans.
Most of the assets will be loans as the value of assets such as furniture and fixtures depreciated after all of its branches closed.
Charterhouse Bank was established in 1996 after taking over the operations of Middle East Kenya Finance Limited.
The institution transformed into a full-fledged bank in 1998 and opened 10 branches in Nairobi, Kisumu and Mombasa.
Eight of Charterhouse’s 10 branches were located in the distressed Nakumatt Supermarket stores today, a partner of the bank through ordinary shareholding. Nakumatt Holdings had 123 million shillings in accounts at Charterhouse Bank.
The CBK has over the years resisted calls to reopen the bank.
The KDIC hopes the liquidation will not be met with headwinds.
This is mainly due to the fact that the shareholders of a company are generally the last to be considered for compensation once the liquidation has taken place.