The Central Bank of Kenya (CBK) on Thursday announced that Chase Bank Limited has been placed under receivership for 12 months over what they termed as unsound and unsafe financial conditions.
In a statement, CBK outlined that it had appointed the Kenya Deposit Insurance Corporation (KDCI) to assume the management, control and conduct of affairs and business at the financial institution.
The move by the regulator comes after Chase Bank experienced liquidity difficulties and the recent resignation of two of its directors.
"Chase Bank experienced liquidity difficulties following inaccurate social media reports and stepping aside of two directors, consequently it was not able to meet its financial obligations on April 6, 2016," CBK stated.
On Wednesday, the bank's chairman Zafrullah Khan and group managing director Duncan Kabui stepped aside following concerns over the credibility of the bank’s financials health.
The two exited after the bank released different reports showing two sets of financial statements within a span of six days.
The first set had understated insider loans to staff and directors by a total amount of Sh8 Billion.
The second report, however, showed that money advanced to directors, shareholders, associates and employees of the bank stood at Sh13.62 Billion in 2015, contrary to the Sh5.72 Billion reported on March 31.
The bank also recorded a loss of Sh792 Million in the latest 2015 records after a significant profit of Sh2.3 Billion in 2014.
Addressing the media, CBK Governor Partrick Njoroge said that the false alarm raised on social media made customers make huge withdrawals from the bank, making it difficult for Chase bank to meet its financial obligation by 6th April 2016.
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