CBK hints at wind-up, Im­pe­rial’s re­vival flops

The reg­u­la­tor says share­hold­ers re­placed their pro­posal to in­ject Sh10 bil­lion into the bank with Sh5 bil­lion through a rights is­sue

The Star (Kenya) - - News - CON­STANT MUNDA @munda­con­stant

The Cen­tral Bank yes­ter­day gave the strong­est hint yet that the col­lapsed Im­pe­rial Bank would be wound up. The reg­u­la­tor said the share­hold­ers have failed to pro­vide a vi­able pro­posal to re­vive the lender.

The CBK dis­closed that the share­hold­ers on June 15 with­drew their Novem­ber 2015 pro­posal to in­ject Sh10 bil­lion into the trou­bled lender, re­plac­ing it with a new pro­posal to raise Sh5 bil­lion through a rights is­sue.

The pro­posal was re­jected by the CBK and the Kenya De­posit In­sur­ance Cor­po­ra­tion, the re­ceiver man­ager, on grounds it was not suf­fi­cient for a cred­i­ble and tan­gi­ble re­cov­ery plan to cover for the al­leged loss of Sh44.9 bil­lion.

“IBLR share­hold­ers have to date failed to pro­vide ad­e­quate as­sur­anc- es to im­ple­ment a pro­posal that will en­able the lift­ing of the re­ceiver­ship, re­open­ing of IBLR, and re­sump­tion of nor­mal ac­tiv­i­ties for its cus­tomers,” a state­ment sent by the CBK and the KDIC stated.

The process of pay­ing de­pos­i­tors up to Sh1.5 mil­lion through NIC Bank, the state­ment said, will con­tinue af­ter the High Court on Fri­day lifted the sus­pen­sion of dis­posal of the bank’s as­sets and li­a­bil­i­ties. This fol­lowed a suit by the be­lea­guered share­hold­ers on Fe­bru­ary 9 be­fore Jus­tice George Odunga, who ruled that liq­ui­da­tion should be the last op­tion.

The deal be­tween NIC and KDIC, which the CBK ap­proved on June 21, led to the ap­point­ment of the mid-tier lender as the as­sets and li­a­bil­i­ties con­sul­tant for IBL.

This en­ables NIC to do due dili­gence on the IBL, take charge of a por­tion of as­sets and li­a­bil­i­ties, and ab­sorb staff at IBL’s 28 branches.

“It was ex­pected that through this process, de­pos­i­tors will be granted struc­tured ac­cess to about 40 per cent of the re­main­ing amount of ver­i­fied de­posits, above Sh2.5 mil­lion, which would bring the cu­mu­la­tive pay­out ra­tio for all ver­i­fied de­posits to about 59 per cent,” CBK said.

The reg­u­la­tor on Septem­ber 30 filed a suit seek­ing to re­cover the Sh44.9 bil­lion – lost be­tween 2003 and Septem­ber 2015 – from the for­mer direc­tors and as­so­ci­ated firms “for fraud, breach of fidu­ciary duty and neg­li­gence”.

“All sums re­cov­ered will be ap­plied in the set­tle­ment of de­pos­i­tors and other stake­hold­ers’ claims, in ac­cor­dance with the law,” the reg­u­la­tor said.

About Sh6.9 bil­lion had been paid out to 39,875 de­pos­i­tors through KCB and Di­a­mond Trust Bank by April 19.

The CBK on Oc­to­ber 4 ex­tended the one-year re­ceiver­ship by the KDIC, which started on Oc­to­ber 13, 2015, by another six months.

/ FILE

Cen­tral Bank of Kenya head­quar­ters in Nairobi

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