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SBM inherited Sh12.5bn CBK boost in banks buy – Business Daily

SBM Bank branch in Nairobi. FILE PHOTO | NMG
Central Bank of Kenya (CBK) pumped Sh12.5 billion into two struggling lenders before their sale to the State Bank of Mauritius (SBM), the bank has said.
SBM said it inherited Sh2.8 billion liquidity support from Fidelity Commercial Bank and Sh9.7 billion from Chase Bank when the lender bought the pair to make an entry into the Kenyan market five years ago.
The Mauritian bank group entered the Kenyan market in 2017 through acquisitions of Fidelity and Chase Bank in deals shepherded by the CBK after the two Kenyan lenders ran into financial crisis.
SBM, which posted profits of Sh186.8 million in the six months to June is carrying Sh11.3 billion in liquidity support and repos from CBK, a line of funding tapped mostly by struggling lenders such as Spire Bank.
The bank said it currently has very strong liquidity and that the multi-billion shilling support was a legacy liabilities inherited from the failed banks.
“The bank is not under any liquidity support framework from the CBK as can be demonstrated by its strong liquidity ratio of 53 percent,” said SBM Bank Kenya chief executive Moezz Mir.
The bank said balances due to CBK, included in the financial statements of the bank, primarily include liabilities that were assumed from Fidelity Commercial Bank and Chase Bank.
SBM is locked in a court fight with former owners of Fidelity Bank who are demanding Sh2.5 billion they claim to have lost in the sale of a Kenyan lender to SBM Holdings for Sh1.
The former owners claimed the bank was struggling adding the Mauritius lender was planning to sell the bank which would make it difficult for them to get compensated.
In a rejoinder, SBM Bank said they had no plans to sell their Kenyan operations and has grown a total asset base of Sh84.2 billion as at 30th June 2022 compared to Sh70.7 billion as at 31st December 2018 after the acquisition of Chase Bank in receivership.
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Joseph Muongi

Financial.co.ke was founded by Mr. Joseph Muongi Kamau. He holds a Master of Science in Finance, Bachelors of Science in Actuarial Science and a Certificate of proficiencty in insurance. He's also the lead financial consultant.