Charterhouse Bank 25-yr run ends as CBK approves windup – KBC

The Central Bank of Kenya of Kenya (CBK) has appointed the Kenya Deposit Insurance Corporation (KDIC) to kick-start the process of winding up Charterhouse Bank Limited (CHB) over severe violation of banking laws.

The lender has been under statutory management since 23rd June, 2006 over what the regulator terms, “…severe violations of the Banking Act by Charterhouse Bank relating to lending, accuracy of returns submitted to CBK, and failure to obtain account opening documentation for a number of customers.”

CBK says in a statement released on Friday that the decision to liquidate the troubled lender follows the submission of the Statutory Management Report by the Statutory Manager on May 6, 2021, recommending that CHB be liquidated.

“The report indicates that in view of the severe violations of the Banking Act by CHB and its inability to address them, liquidation is the only feasible option.”

According to CBK, prior to being placed under statutory management in 2006, Charterhouse Bank was classified as a small bank at position 30 out of 41 licensed banks in the country with an asset base of Kshs. 4 billion and a market share of 0.55%.

It had 428 loan accounts valued at Kshs. 2.9 billion and 4,699 deposit accounts valued at Kshs. 2.9bn.

Its equivalent ranking at end 2020 with the 2006 asset base would be the smallest of all bank, CBK stated.

CHB was established in 1996 after taking over the operations of Middle East Kenya Finance Limited.

It became a  fully-fledged bank in 1998 with 10 branches in Nairobi, Kisumu and Mombasa.

Eight of these branches were located at branches of Nakumatt Supermarket Stores, an associate of the bank through common shareholding.

Charterhouse Bank becomes the second lender in a span of three weeks to undergo liquidation after Chase Bank Limited on 16th April, 2021.