Treasury CS Rotich stands in way of Chase Bank-SBM sale

Chase bank customers view a notice pinned on the entrance of the bank's River road branch in Nairobi. (File, Standard)

Treasury Cabinet Secretary Henry Rotich is the man who wields the power to veto or approve transfer of Chase Bank’s assets to the State Bank of Mauritius.

Despite the deal having been concluded and parties expecting it to close by Friday last week, the National Treasury has poured cold water invoking section 9 of the Banking Act that gives it the final say.

“We have been told the process is at section 9 of the Banking Act awaiting the ministerial approval,” a source at Chase Bank told Weekend Business after a meeting was held with employees yesterday.

On Monday, The Standard learnt that a signature was missing from the documents which frustrated efforts to file a gazette notice last week.

However, Treasury Principal Secretary Kamau Thugge said the deal had been approved and was no longer at the Treasury. “That is not with us, that was approved,” Dr Thugge said. Weekend Business can also reveal that the deal has picked up the ire of the regional antitrust body Comesa Competition Commission which says it has not been informed.

CCC approved SBM takeover of Fidelity Bank but says they were not notified on the new deal.

Breached procedure

“The merger has not been notified to the Commission yet. It may be that the parties have not applied their mind to this or simply the merger is not notifiable if the notification requirements were not met,” Willard Mwemba Head of Mergers and Acquisitions at CCC said via email.

The watchdog has now contacted SBM and says the Indian Ocean island lender faces stiff penalties if the deal is found to have breached procedure.

“We have engaged the parties and we are yet to hear from the them. If the transaction is notifiable, then the parties risk being fined a maximum of 10 per cent of their Comesa turnover,” Mwemba said.

Such a regulatory oversight may delay or nullify the deal for fresh filling which will mean that depositors at Chase Bank will have to wait even longer to access their money.

Depositors’ funds are locked up in the lender since April 2016 with several deadlines as to when they will get their money being breached.

The Bank was then slated to open by the first quarter of 2017 but timelines were later pushed to accommodate the complex acquisition process.

Break even

Reopening was pushed to December last year before being deferred to January 2018 and has been on hold since CBK announced the deal with SBM.

The delays are also impeding SBM goal which was hoping to use the combined balance sheet of Fidelity Bank and Chase bank to break even within a year.

“With an asset base of Sh542 billion ($5.328 billion) as at September 30, 2017, the Bank would rank second only to KCB, with total assets of Sh655 billion ($6.438 Billion), in East Africa and would be ranked a Tier I bank,” Daniel Kamau CEO Fusion Capital said.

SBM entered the Kenyan market with 0.4 per cent market share when it took up Fidelity Commercial Bank. But Chase Bank assets carved out would offer it 95 branches and assets only second to Kenya Commercial Bank.

Fidelity Commercial Bank gave the Indian Ocean Island lender 14 branches and ranked 31 out of 41 Kenyan lenders. Chase Bank will give it 62 branches, along with Rafiki Microfinance Bank’s 19 branches.