By Jacob Juma
Fellow Kenyans, CBK has today placed Chase Bank under receivership. I applaud the decision taken by the governor of CBK Dr. Njoroge in safeguarding depositors interests.
A number of reasons have contributed to Chase banks problems. Key among them is understating loan portfolio, insider lending and overstating their profits.
In the Financial Year (FY) 2014, Chase Bank made profits of Ksh2.3 billion. Total Assets for the bank was at Ksh107 billion while Liabilities were Ksh96 billion. The banks core capital was Ksh11 billion. In the same FY 2014, the bank had borrowed Ksh15.5 billion, loans to customers was Ksh64.4 billion, staff loans was Ksh1.8 billion and director loans at Ksh1.37 billion.
In the FY 2015 September, the banks profit declared remained the same at Ksh2.3 billion, loans to customers increased from Kshs64.4 billion to Ksh73 billion, staff loans increased to Ksh2.2 billion and Director loans at Ksh1.6 billion. Audited Accounts for the FY2015 reveal major changes between October 1st and December 31st.
In just three months Director Loans grew from Ksh1.6 billion to Ksh10.5 billion. This is the beginning of Chase Bank problems. It means that eight directors of Chase Bank borrowed Ksh9 billion in three months.
Between October, 2015 and December, 2015 non-performing loans grew from Ksh1.7 billion to Ksh10 billion, an increase of Ksh8.3 billion. But why should non-performing loans grow from Ksh1.7 billion to Ksh10 billion to a bank that had managed to maintain them at Ksh1.3 billion? Loans become non- performing if they are not serviced within 90 days.
For Chase Bank to say that Ksh8.3 billion of new loans are non-performing yet they came into books within 90 days, they are not being honest. That is fraud. Attached see CBK Notice placing the bank under statutory management