Payday for collapsed Kenya’s Imperial Bank depositors

The Kenya Commercial Bank (KCB) has finalized the process of settling claims by depositors of Imperial Bank Limited (In Receivership) (IBLR).

This follows the announcement by the Central Bank of Kenya (CBK) on December 11, 2018, appointing KCB Bank Kenya as an agent of Kenya Deposit Insurance Corporation (KDIC)—the IBLR receiver manager—to disburse the funds to the depositors.

The customers will access 12.7 per cent of eligible deposit balances remaining at IBLR from December 20, 2018, at any of the KCB branches across the country.

KCB had presented a Binding Offer to CBK in respect to release of depositors funds and verification of loans, which the regulator accepted.

The execution of the offer now paves the way for the verification of loans and controlled access to deposits.

Under the transaction, KCB is not acquiring IBLR and is in discussions with CBK and KDIC for the speedy resolution of IBLR.

KCB Group CEO and MD Joshua Oigara said: “This is a significant milestone which is yet another convincing marker of Kenya’s financial sector’s ability to offer viable solutions benchmarked against global best practice”

He added, “We have put in place robust processes to guide the next steps and we will communicate the way forward to IBLR customers within a few days.”

Depositors who have claimed in the past through KCB Bank and still have their accounts active will not be required to fill any claim form and their available funds will be directly credited into their respective KCB Bank accounts.

However, this group of depositors still need to counter check their account status with their respective KCB Bank branches.

Depositors who will be claiming their funds for the first time through KCB Bank are required to open an account with any of the KCB Bank branches and shall complete a claim form with the assistance of the bank officials who will forward the same to IBLR for processing.

The Binding Offer also outlines that KCB will complete the loan verification process within the first quarter of 2019. The loan verification process is expected to result in further recoveries for eligible depositors of IBLR.

This transaction offers KCB the opportunity to have a positive impact in the financial sector by providing businesses and individuals that had accounts with IBLR to continue with normal banking operations at KCB Group.

The Imperial Bank opened its doors in 1993 when there were only 15 banks. This number grew to 48 in less than a decade.

Abdulmalek JanMohammed, the brainchild behind the lofty bank ideal of Imperial Bank, was an aggressively ambitious man.

At the bank’s launch, JanMohammed was in an aura of prominence, probably to show that he was not starting a small bank.

According to an expose on how the bank was robbed, even the choice of name made it clear Abdulmalek had lofty, imperial dreams, for himself and his new baby. But he would turn its tagline “Looking after your interest!” into something else.

IBLR’s depositors will recover about Sh20.3 billion of the Sh58 billion in customer deposits the bank held as at the end of June 2015.

The bank had 52,398 deposit accounts at the end of 2014 with operations in Kenya and Uganda.

With 27 branches by the time it went under, these are some of the Imperial Bank assets that KCB may acquire after taking over of the collapsed lender’s loan book.

KDIC chief executive Mohamud Ahmed said Kenya’s largest bank by assets is conducting due diligence that will pave the way for the takeover of the unnamed branches.

However, KCB says it has no plans of taking over the troubled lender.

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