The Central Bank of Kenya (CBK) has approved the liquidation of the assets of Imperial Bank that was placed on receivership in 2015.
In a statement to newsrooms on Thursday, the regulator announced the appointment of Kenya Deposit Insurance Corporation (KDIC) as the bank’s liquidator.
In arriving at the decision, CBK considered recommendations by KDIC that winding up the business was the only feasible option due to the weak financial position of Imperial Bank Limited (In Receivership) (IBLIR).
“CBK has assessed the recommendation by KDIC, the external auditor’s report, other pertinent information, and considered that liquidation would facilitate the orderly resolution of IBLIR in accordance with the Laws of Kenya, to protect the interest of IBLIR depositors, its creditors, and the wider public interest. Subsequently, on December 8, 2021, CBK appointed the KDIC as liquidator of IBLIR in terms of Sections 53(2) and 54(1a) of the Kenya Deposit Insurance Act, 2012,” said CBK.
Imperial Bank went under in October 2015 and CBK placed it under the management and control of the KDIC over what it termed as unsound business practices. This was done in the interest of the bank’s depositors, creditors and members of the public.
Read: CMA Allowed To Hunt Collapsed Imperial Bank Directors Over Ksh2 Billion Bond
On June 2, 2020, Kenya Commercial Bank (KCB) acquired certain assets valued at Ksh3.2 billion and assumed liabilities of the same value of IBLIR.
From June 2, 2020, IBLIR depositors were to be paid a total of Ksh3.2 billion over a period of four years. Subsequently, the depositors would have cumulatively recovered 37.3 percent of the deposits since 2015 when payments were commenced.
“Following four payment disbursements, 45,700 out of the 50,000 (92 percent) depositors have accessed their funds in full,” CBK said.
Read Also: KCB To Take Over Five More Imperial Bank Branches In Receivership Deal
In September 2020, following the acquisition of certain assets and assumption of liabilities by KCB, CBK required KDIC to appoint an independent external auditor, to carry out a comprehensive audit of BLIP, based on terms of reference approved by CBK pursuant to Section 24 of the Banking Act.
The objectives of the audit were inter-alia to provide additional basis for further action, CBK said.
KDIC contracted an independent external auditor in May 2021.
The external auditor submitted the audit report to CBK on October I, 2021. CBK noted a number of gaps in the report, some of which were subsequently resolved.
Read Also: KCB Commences Imperial Bank Depositors Pay-out
“A number still remain pending, all related to KDIC. Accordingly, on October 13, 2021, CBK advised KDIC to resolve all the pending gaps in 45 days,” CBK said on Thursday.
KDIC submitted a receivership report to CBK recommending that IBLIR be liquidated on December 7.
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