City Lodge has Sh348.8mn locked in Chase Bank
South African hotel group, City Lodge, has Sh348.8mn (US$3.4mn) locked in Chase Bank.
The hotel company, who also owns Nairobi’s Fairview Hotel and Town Lodge, has announced in its latest annual report that the deposit was large enough for its recoverability to be considered a key audit matter.
“The group, through a wholly owned subsidiary, has deposits with Chase Bank (Kenya) Limited amounting to Sh384.8 million at year-end,” City Lodge have commented in the report.
“The group’s ability to access the deposits is restricted and due to uncertainty about whether the deposits are fully recoverable given the receivership process, an impairment of R24 million (Sh182 million) has been recognised at year-end.”
The company, who is building another hotel in the Two Rivers Mall, has reported that the amount written off is an estimate of recoverability of the deposit based on available information about the progress of the receivership as of June.
KPMG, City Lodge’s external auditor, regards that the confined money was considered a key audit matter due to the level of judgement involved in determining the recoverable amount of the deposit and subsequent impairment.
The cash deposits are now classified a “other investments”.
Chase Bank went into receivership on 27 April 2016, and was reopened through the new management, Kenya Deposit Insurance Corporation, on 26 April 2016.
Depositors into Chase Bank may be able to recoup their money if Mauritius’ SBM Holdings succeed in acquiring the lender.