RECOVERY

Imperial Bank's future uncertain as depositors receive fifth payment

The recovery has however excluded the 50 per cent of loan assets which are linked to ongoing litigation.

In Summary

•According to Kenya Deposit Insurance Corporation (KDCI) chief executive Mohamud Ahmed Mohamud has said the bank’s assets and liabilities have to be resolved, however he didn't give a defined timeline.

Imperial Bank depositors hold placards outside the Westlands branch.
Imperial Bank depositors hold placards outside the Westlands branch.
Image: /ENOS TECHE

The full acquisition of Imperial Bank Limited currently under receivership is still unclear. 

Kenya Deposit Insurance Corporation (KDCI) chief executive Mohamud Ahmed Mohamud, said the bank’s assets and liabilities have to be resolved but failed to give a defined timeline.

“First we have to sort out this assets then that’s when we can know where to take this bank,” Mohamud said during an update on KCB bank’s final offer and signing of an agreement to release funds.

He said: “We cannot say let's close this bank because there are still some assets which we have to recover."

KDIC and KCB bank announced the takeover of 7.5 per cent deposits from Imperial Bank limited in receivership of the outstanding deposit balance, translating total recovery to a tune of 40 per cent.

This means it will be the fifth payment to a substantial number of remaining depositors after, Central Bank of Kenya and KDIC, in April, announced the acceptance of the offer from KCB.

The offer included a recovery of 19.7 percent of eligible depositor balances remaining at Imperial Bank Limited In receivership.

The Nairobi Securities Exchange-listed firm also intended to transfer Imperial Bank’s five branches and portion of its loans and deposits.

This final offer, KCB will take 7.5 per cent of the deposits and an equivalent percentage of liabilities.

 

“KCB conducted an intense due diligence and have since revised the final offer to a takeover of 7.5 per cent of the outstanding deposit balance. The first bunch in payment will be dispatched on the completion date as stated in the proposal made in April 5,” Mohamud said.

 “This is the best decision regarding issuance of deposits instead of dissolution of the bank.”

The recovery has however excluded the 50 per cent of loan assets which are linked to ongoing litigation.

The bank has been under receivership in the last four years.

“We call upon other banks to take up loans as well. Some of them are very good,” he added.

In the December 2018 announcement, CBK and KDIC, had announced a release of funds increasing total recovery to approximately 35 per cent of original eligible deposits held at the date of receivership.

The funds were made available in three tranches, and approximately 92 per cent of eligible depositors had been granted full access to their balances.

Mohamud has also the banking industry safety net will roll out a risk-base premium in July 2020 to protect public assets controlled by the banks.

 He said the review of the premium rate will be determined by individual bank’s on internal policies, credit rate, systems, legal reputation.

 “Once we receive surveillance report from CBK, it will inform on premiums to be paid. This will help push self regulation and limit unfair practices especially within banks with a high-risk appetite,” he said.