10th April 2016: Kenyans in the diaspora furious over Chase Bank closure

Chase Bank customers read a closure notice at Mama Ngina Street branch in Nairobi, April 7, 2016 after the bank was put in receivership by the Central Bank of Kenya. PHOTO | SALATON NJAU | NATION MEDIA GROUP.  

Summary

• Chase Bank, which was placed under receivership on Wednesday, became the third bank to fall in that category in less than a year.
• It had a significant clientele in the diaspora following an aggressive campaign to woo investors outside the country in 2014 and part of 2015.
• Kenyans abroad are now appealing to the government to ensure that all banking institutions conform to rules and regulations that guarantee the security of customers' funds.

Chase Bank had a significant clientele in the diaspora following an aggressive campaign to woo investors abroad in 2014 and 2015.Kenyans in the diaspora, some of whom banked with the fallen Chase Bank, have reacted angrily to the news of its insolvency, with most wondering why the customers were not warned of the impending closure in good time.

Chase Bank, which was placed under receivership on Wednesday, became the third bank to fall in that category in less than a year.

It had a significant clientele in the diaspora following an aggressive campaign to woo investors outside the country in 2014 and part of 2015.

Kenyans abroad are now appealing to the government to ensure that all banking institutions conform to rules and regulations that guarantee the security of customers' funds.

In a letter sent to the Central Bank Governor and copied to the Nation by a US based lobby group, Kenyan for Kenya (FKF), the members seek the government's intervention to "ensure the restoration of the fast-waning investor confidence among Kenyans in the Diaspora."

The letter signed by the lobby chairman, Mr Peter Makanga, suggests that Kenya emulates the United States, which, in 1936, established a Federal Insurance Deposit Corporation (FDIC), to ensure that individual depositors don't lose their savings even when banks go under.

"This will go a long way in ensuring that Kenyans residing out of the country continue remitting money to their motherland without unnecessary inhibition," reads part of the statement.

Kenya already has a deposit insurance scheme, established in 1985, to provide cover for depositors and act as a liquidator of failed banking institutions.

The Kenya Deposit Insurance Corporation (KIDC) is established under Section 36 of the Banking Act, Chapter 48 of the Kenyan laws.

A depositor in Kenya is guaranteed payment of a maximum of Sh 100,000 in case of failure of a member institution.

Any excess amount is paid as liquidation dividend after the liquidator has recovered sufficient funds from the sale of the institution’s assets and recovery of debts.

In the US, each depositor is insured to at least $250,000 per insured bank, according to information on the FDIC website.

SOCIAL MEDIA VIEWS

The Kenyans in diaspora took to social media to make their views known.

@Kathyjoe tweeted: "It's high time they emulated most of the civilised societies where no money gets lost as it is not the investor's fault. Can't believe this is happening in this day and age.

Annkarish said: "This embarrassing cycle must end now. Kenyans are milked by politicians, banks, et al. Where shall we run to?"

Mugo Njamba said on Facebook: This is why, in spite of all the assurances about Kenya being a very nice place, I can never risk investing there. Say what you may, but I just don't trust many of my fellow Kenyans, period!

Ochieng George said: "Many other Kenyans—including thousands of us in the diaspora—have previously lost money through questionable institutions and this cannot be allowed to continue. It's not only painful but also scares away would-be investors"

Jesse Mukangu wondered on Instagram: So, our banks have become pyramid schemes and poor citizens have nowhere to run to when a few individuals decider to enrich themselves. Which century are we living in?"

In 2015, Dubai Bank Kenya became insolvent after experiencing serious liquidity and capital deficiencies.
In the same year, CBK also placed Imperial Bank under receivership due to what it termed as “illicit banking practices by its directors.”