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 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.
Central Bank of Kenya headquarters in Nairobi