The Central Bank of Kenya (CBK) has appointed Kenya Deposit Insurance Corporation to liquidate Charterhouse Bank (CHB), 15 years after it was placed under statutory management over claims of money laundering.
A report by the statutory manager on May 6 recommended that the bank be liquidated. “The report indicates that because of the severe violations of the Banking Act by the bank and its inability to address them, liquidation is the only feasible option," Central Bank said in a statement.
“CBK has assessed the recommendation and considered that liquidation would facilitate the orderly resolution of the assets and liabilities of CHB per the Laws of Kenya, to protect the interest of CHB depositors, its creditors, other stakeholders and the wider public interest."
CHB was established in 1996 after taking over the operations of Middle East Kenya Finance Limited. Subsequently, the institution converted to a fully-fledged bank in 1998. The bank had 10 branches in Nairobi, Kisumu and Mombasa.
Eight of the branches were located at branches of the erstwhile Nakumatt Supermarket Stores, an associate of the bank through common shareholding.
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By 2006, CHB was classified as a small bank, ranked 30 out of 41 banks with an asset base of Sh4 billion and a market share of 0.55 percent. It had 428 loan accounts valued at Sh2.9 billion and 4,699 deposit accounts valued at Sh2.9bn. Its equivalent ranking at end 2020 with the 2006 asset base would be the smallest of all banks.
On June 23, 2006, CBK placed CHB under statutory management under Section 34(1) (d) of the Banking Act. This followed severe violations of the Banking Act by CHB relating to lending, accuracy of returns submitted to CBK, and failure to obtain account opening documentation for many customers.
The placement of CHB under statutory management and take over by CBK was done in the interest of the bank’s depositors, creditors and members of the public.
