The Kenya Deposit Insurance Corporation has wound up Fortune Finance Limited, a Moi era bank that collapsed with Sh320 million depositors’ cash nearly two decades ago.
Speaking exclusively to the Star, KDIC chief executive Mohamud Mohamud said the lender has been under liquidation since September 2000 and
ceased to exist after creditors completed review of the its accounts without raising any objection.
“The winding up of Fortune Finance brings to nine the number of banks that we have successfully concluded compensation,” he said.
Another 17 banks are at different stages of the compensation process, including Chase and Imperial Banks.
The lender had first been placed under statutory management in August 1999.
This was necessitated when the banks’ regulator tracked a large portfolio of non-performing loans and succumbed to depositors’ pressure as a number of customers expressed desire to withdraw their funds in lump sum. Most of Fortune Finance’s money was held up in Bullion Bank which collapsed in 1998.
According to KDIC, good assets have been exhausted and dividends not received are unlikely to offer value to creditors.
“We believe we have exhausted those realisable assets and the cost of liquidating is now going to surpass the value of the assets. That is why we have to call for the release of the liquidator as per the winding up order,” Mohamud said.
Once a bank is placed under liquidation, depositors are paid up to Sh100,000 usually within two years. Unclaimed money is included in dividends thereafter.
“Liquidation is a painful process. It is my wish that no depositor, creditor or bank experience this going forward,’’ Mohamud said.
Since 1993, the insurer has liquidated 25 banks including Post Bank Credit, Meridien BIAO, Ari Bank Corporation, Reliance Bank, Trade Bank, Thabiti, Daima Bank and Dubai Bank.
Others are Prudential Building Society, Middle African Finance, Pan African Bank, Kenya Finance, Trust Bank and Euro Bank.
The agency has recovered 19.4 per cent of more than Sh40 billion since establishment of the Deposit Protection Fund Board in 1987.
