The High Court has summoned Central Bank of Kenya (CBK) Governor Kamau Thugge to appear on June 3, 2025, over a legal dispute involving a $7.5 million (Sh970 million) deposit. The deposit was made by Mauritian lender AfrAsia Bank with the now-collapsed Chase Bank (Kenya) Ltd.
The summons, issued by Justice Francis Gikonyo, is the latest development in AfrAsia Bank’s prolonged efforts to recover the funds, now valued at approximately $13.97 million (Sh1.8 billion) due to accrued interest. The High Court is seeking Thugge’s explanation on whether CBK-held funds belonging to SBM Bank (Kenya) Ltd. can be used to offset the debt.
AfrAsia’s Deposit and Chase Bank’s Collapse
In March 2016, AfrAsia Bank placed a one-month term deposit of $7.5 million with Chase Bank at an annual interest rate of 2.3%, with maturity scheduled for April 18, 2016. However, just eleven days before the deposit was due, CBK placed Chase Bank under receivership on April 7, 2016, following revelations of irregular lending and falsified financial statements.
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Chase Bank’s collapse affected over 350,000 depositors, with the KDIC tasked with liquidating remaining assets to recover funds for depositors with balances exceeding Sh100,000. The Capital Markets Authority (CMA) later fined former Chase Bank executives and auditors a total of Sh36 million for their roles in the collapse, citing issues like false financial statements and conflicts of interest.
Unresolved Claims After Acquisition
In 2018, SBM Bank (Kenya) acquired 75% of selected Chase Bank assets and liabilities under a Sh69.59 billion agreement, which included property, plant, and equipment worth Sh1.25 billion. However, AfrAsia’s claim was not part of the acquisition. As a result, AfrAsia wrote to Chase bank on May 6, 2016, seeking repayment. Chase Bank allegedly acknowledged the liability and promised to reinvest the amount for nine months, but the funds were not repaid.
AfrAsia moved to court, and on August 12, 2022, the High Court ruled in its favor, ordering SBM to pay the $7.5 million deposit plus interest. SBM Bank appealed the ruling, but the Court of Appeal dismissed the application as procedurally defective.
CBK Caught in the Middle
AfrAsia is now seeking a court order directing CBK to seize SBM’s funds held in the form of Kenyan government securities. According to documents filed in court by AfrAsia, SBM holds Sh31 billion in government securities classified as “held to maturity” and another Sh6.9 billion under “available for sale,” based on unaudited financials as of March 31, 2025.
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AfrAsia argues these assets demonstrate SBM’s ability to repay the debt. The bank further asserts that CBK, as custodian of these securities, should facilitate the settlement of the court-ordered debt. If CBK does not hold enough cash, AfrAsia wants the securities listed and liquidated through a licensed investment bank or stockbroker on the Nairobi Securities Exchange.
Despite sending a formal demand to CBK on February 28, 2025, AfrAsia received no response, prompting the current court summons for Governor Thugge.
Thugge’s Role and Court Appearance
Although Kamau Thugge was not CBK Governor during Chase Bank’s 2016 collapse, he served then as Principal Secretary at the National Treasury under President Uhuru Kenyatta. He was also present at a press conference on April 8, 2016, alongside then-CBK Governor Patrick Njoroge and Treasury Cabinet Secretary Henry Rotich, addressing the banking sector’s stability post-Chase Bank’s collapse.
As the CBK Governor since June 19, 2023, Thugge is now directly involved in the case due to the CBK’s role as the regulator holding SBM’s funds. The summons targets him in his official capacity to address the court application to recover the deposit through funds held by CBK.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.