France’s third-largest bank by assets, Societe Generale, and Mauritius-based SBM Holdings are the frontrunners to acquire troubled Chase Bank and its subsidiary, Rafiki Microfinance, the Business Daily can now reveal.
The two have emerged top of the list of investors, including KCB Group, I&M Bank, Stanbic Bank and South Africa’s First Rand, who had expressed interest in taking over the Kenyan lender.
The Central Bank of Kenya (CBK) placed Chase Bank under receivership in April 2016 following a liquidity crisis, but is now seeking to sell off the business alongside its subsidiary Rafiki, in which the bank has a 75 per cent interest.
The CBK expects to pick its preferred investor by Friday and, beginning June 26, introduce them to Chase Bank’s shareholders, creditors and depositors to discuss their “proposal and way forward.”
“For two or so weeks in early May, the interested investors held separate meetings with Chase and Rafiki executives. They pored over their books and asked questions,” a source familiar with the negotiations said.
“The CBK had by the time given the shortlisted candidates access to a data centre and the meetings were meant to help interested investors get firsthand clarifications on any matter – including the loanbook and communication strategy.”
First Rand and Stanbic were, however, no-shows at the meetings, probably because the information in the data centre was satisfactory for them to prepare and submit a final proposal by June 9.
The duo could also have lost interest in the deal.
Initially, the CBK had shortlisted four unnamed international banks, three local banks and five financial groups but the suitors’ list has since narrowed down to just six.
Paris-based Societe Generale is a financial services giant with a presence in 66 countries – including Chad, Burkina Faso, Benin, Ghana and South Africa in Africa. It has 145,000 employees and 31 million clients.
The bank closed 2016 with assets of Sh161.7 trillion, Sh43.18 billion net profit and revenues of Sh708 billion.
SBM Holdings, which has a presence in Mauritius, Madagascar, India and Myanmar, has over 1,100 employees and 450,000 customers, and reported Sh6.8 billion in after-tax profit last year and assets of 432.6 billion.
Last November, SBM acquired Kenya’s Fidelity Bank in a deal that was valued at Sh100 ($0.98), promising to inject Sh1.45 billion of fresh capital into the business.
KCB Group’s chief executive, Joshua Oigara, last July said the bank, which was appointed Chase Bank manager, does not have exclusive rights to buy the fallen lender and “neither was it going to be the only buyer.”
It has recently emerged that KCB is looking to take over the operations of National Bank of Kenya, meaning that, to preserve fair competition in the industry, KCB could be forced to drop one bid.
“The process and timing beyond June 26, will be informed by the structure proposed in the preferred investor proposal, but is currently intended that any resultant transaction will be completed before September 30,” said the CBK.
To come up with the final shortlist, the CBK says it ensured candidates have the capacity to facilitate a speedy and optimal recovery for depositors, creditors and other stakeholders in Chase Bank.
The selected investor will be expected to inject the capital required to raise the bank’s equity to levels desired by the regulator.