Chase Bank Kenya: hidden insider loans turned a bank run into receivership

Chase Bank began in 1995, when a group of Kenyan businessmen paid US$1.23 million for a 60% stake in United Bank, a small lender already in statutory receivership. It reopened under new owners in 1996 as Chase Bank, moved its only branch from Kisumu to Nairobi in 1997, and grew steadily for two decades. By December 2015 the bank held US$1.428 billion in assets, Sh73.9 billion in deposits, and served 170,000 customers through 62 branches — more than half of them corporate.

The 2015 accounts were the first crack. Chase posted a Sh792 million loss, and non-performing loans jumped from Sh3 billion to Sh11 billion in a year. A revised statement then revealed a "significant difference" in loans advanced to directors and employees — the market would learn the figure was Sh8 billion of secret insider loans. Chairman Zafrullah Khan and managing director Duncan Kabui stepped aside after the accounts were published.

On 6 April 2016 the resignations went public and social media buzzed with talk the bank was in trouble. Customers rushed to withdraw. The Central Bank of Kenya had assured the public on Wednesday there was nothing to worry about; on Thursday it put the bank into receivership under the Kenya Deposit Insurance Corporation, citing liquidity difficulties, "inaccurate social media reports" and unsound transactions. Chase was the third Kenyan bank to fail in twelve months — after Dubai Bank and Imperial Bank — and a liquidity support fund for the whole sector followed within days.

Chase reopened under KCB's management on 27 April, but it was never coming back whole. In April 2018 the State Bank of Mauritius took 75% of deposits, the staff and the branches into its SBM Kenya subsidiary; the rest went to liquidation. The reckoning fell on the people paid to see it coming: the Capital Markets Authority fined Deloitte Sh10 million for failing to detect the errors in Chase's financial statements, and former executives went on trial — still running in 2026, with the defence arguing that the firm which signed the accounts was never independent enough to convict.