Kenyan court clears Equity Bank to auction Riverside office block over $9.5 million default

A Kenyan appellate court has cleared Equity Bank, the flagship banking subsidiary of Equity Group, led by Group CEO James Mwangi, to auction the Riverside Office Block in Nairobi, dismissing an application by Chase Bank (in liquidation) to halt the sale as part of efforts to recover a Ksh1.3 billion ($$9.5 million) loan tied to the property.

The decision deals a significant blow to the liquidators of Chase Bank, weakening efforts to preserve disputed assets tied to its collapse while strengthening Equity Bank’s position to recover the outstanding debt through the imminent sale of the Riverside Office Block.

Court backs lender’s recovery move
The loan, issued in 2012 to Riverside Mews Limited and later restructured, was secured against the office building and its rental income. Following a default, Equity Bank moved to enforce its security, issuing statutory notices and initiating auction proceedings to recover the outstanding debt.

Chase Bank, currently under liquidation by the Kenya Deposit Insurance Corporation (KDIC), sought to block the sale, arguing that the property had been acquired using misappropriated depositor funds. The lender urged the court to preserve the asset pending the outcome of a separate recovery case against former directors led by Zafrullah Khan.

However, the appellate court ruled that while the intended appeal raised arguable issues, there was no sufficient basis to grant an injunction stopping the sale.

Balancing recovery and financial risk
“It is not in dispute that the respondent is a tier one bank, and in the event that the appeal succeeds, it is capable of compensating the applicant for any loss,” the court said in its ruling delivered on March 13.

The judges further noted that the outstanding loan continues to accrue interest, warning that delays in disposing of the asset could result in the debt exceeding the property’s value, thereby increasing financial risk.

Earlier, the High Court had upheld Equity Bank’s right to exercise its statutory power of sale, citing the existence of a valid charge over the Riverside property.

Implications for Kenya’s banking sector
Equity Bank’s expansion strategy is deeply rooted in inclusive growth. Under CEO James Mwangi’s leadership, the bank has significantly increased its customer base to over 20 million.

With the dismissal of the injunction, Equity Bank is now free to proceed with the auction, marking a significant step in resolving one of the lingering loan recovery cases linked to the collapse of Chase Bank.

The ruling underscores the judiciary’s growing emphasis on enforcing creditor rights while balancing depositor protection concerns, reinforcing confidence in Kenya’s banking and legal systems as lenders navigate non-performing loans and asset recoveries.