CBK sends Charterhouse Bank into liquidation

The Central Bank of Kenya has approved the wind up of Charterhouse Bank Limited.

The green light to liquidate the bank is on the recommendation of the lender’s statutory management report submitted on Thursday.

“The report indicates that in view of the severe violations of the Banking Act, Charter House Bank (CHB) and its inability to address them, liquidation is the only feasible option,” CBK said in a statement on Friday.

“CBK has assessed the recommendation and considering that liquidation would facilitate the orderly resolution of the assets and liabilities of CHB in accordance with the laws of Kenya, to protect the interest of depositors, creditors and other stakeholders including wider public interest.”

The decision comes barely one month since the banking sector regulator approved the wind up of Chase Bank Limited in Receivership (CBLIR), also as a last resort measure.

CBK has subsequently appointed the Kenya Deposit Insurance Corporation (KDIC) to orchestrate the liquidation proceedings with the agency also being tasked with the wind up of Chase.

The resolution of the pair is set to only leave Imperial Bank Limited in Receivership (IBLIR) as the only troubled lender under the oversight of the reserve bank.

KCB Group has nevertheless carved out part of the lender’s assets and liabilities including five branches.

Chaterhouse Bank was placed under the statutory management of the CBK on June 23, 2006 following severe violations of Banking Act provisions relating to lending, accuracy of returns submitted to the regulator and failure to obtain account opening documentation for a number of customers.

The KDIC is expected subsequently issue information on the liquidation procedure for CHB including the payment schedule of its depositors.

Ten years after its establishment through the take over of Middle East Kenya Finance Limited in 1996, CHB had a branch count of 10 and an asset base of Ksh.4 billion including a Ksh.2.9 billion loan book.

Curiously, eight of the bank’s ten branches were found inside Nakumatt stores, an associate of the bank through common shareholding but now a defunct outfit.