CBK approves Chase Bank liquidation

Five years after Chase Bank went into receivership, the Central Bank of Kenya has finally given a green light for the bank to be liquidated. The decision followed a recommendation from Chase Bank’s receiver-manager, the Kenya Deposit Insurance Corporation (KDIC) to liquidate the lender. Solomon Kariuki, an Investment Analyst at Cytonn, provided insights into the Kenyan market performance. The Kenyan shilling appreciated against the dollar by 1.1% last week, closing at 107.1, attributing it to lower import amounts, despite a 7.7% depreciation in 2020. Kariuki highlighted that the shilling might face pressure due to rising global uncertainties, leading investors to prefer holding investments in dollars and other hard currencies. The US dollar has also strengthened against major currencies, indicating an overall appreciation against the world currencies. Regarding liquidity in the Kenyan market, Kariuki noted a slight tightening as the interbank rate increased from 4% to 5% last week, suggesting reduced liquidity. Treasury bill subscriptions remained under-subscribed, mainly due to trading liquidity and increased interbank rates. Investors favored the 364-day paper, showing strong interest despite a slight decrease in oversubscription compared to the previous week. Kariuki highlighted the rising yields on government papers, reflecting investors' concerns about elevated market risks from increased COVID-19 cases and travel restrictions in key economic zones. One-year paper rates rose to 9.4%, signaling investors' demand for higher premiums amidst economic uncertainties. The government's increased borrowing to meet domestic targets could lead to accepting more expensive bills and higher trade-backed rates. The approval of Chase Bank's liquidation by the Central Bank of Kenya marked a significant step in resolving the bank's receivership, initiated in 2016. Kariuki emphasized the importance of safeguarding investors' interests throughout the process, leading to Kenya Deposit Insurance Corporation's recommendation for liquidation after five years of management under receivership. KDIC is set to provide further details on the liquidation process and depositor payments, aiming to restore confidence in the banking system and regulatory procedures. In the market, B.O.C. Kenya PLC recently gained top position as the price gainer at the Nairobi Securities Exchange, following tech overbearing trends. Kariuki noted investors' interest in capitalizing on potential benefits from the market and speculated on continued positive performance, particularly with potential acquisitions or price adjustments. Although uncertainties persist in the global market and domestic economy, investors remain optimistic about seizing opportunities in the evolving market landscape.