Top Imperial Bank customers to receive 35% of deposits
The Central Bank of Kenya (CBK) and the Kenya Deposit Insurance Corporation (KDIC) announced the conclusion of the Imperial Bank receivership that will probably not satisfy customers who still had vast sums deposited at the bank that was suddenly closed in 2015.
KDIC and CBK announced they had accepted a modified biding offer from KCB, Kenya’s largest bank for Imperial Bank (in receivership) that comes with a payment of 12.7% of the balances that were owed to the remaining depositors.
Closure in sight for depositors of Imperial Bank with CBK’s acceptance of binding offer from KCB. Payment of 12.7% of eligible balances to depositors. Unfortunately, balance of deposits will be lost. https://t.co/jlVRctqfBW
Since receiving a first payment three years ago through KCB and Diamond Trust banks, of up to Kshs one million ($10,000), that took care of most of the small depositors, further payments have been availed to larger depositors. But with the acceptance of the offer today, they will have only accessed 35% of the deposits they had at Imperial when the bank was placed under receivership, with the balance of their deposits now uncertain. A loan verification process will be done through the first quarter of 2019 after which depositors may be able to receive more of their funds
Since the failure of two mid-tier banks that had issued bonds, the corporate bond market has been relatively dry. While a bond issued by EABL soon after the Imperial Bank collapse was well received, delayed bank resolutions have cast a shadow over corporate bonds #CMSRQ32018
The collapse of the bank started in the days after the sudden death of its Managing Director, after which revelations of fraudulent accounts he managed, secret off-the-book loans, and fishy undocumented cash transfers came to light. There are some court cases ongoing against the top managers of Imperial Bank. As for bondholder at Imperial, their payment is also uncertain, and the collapse of the bank has had effects on the local corporate bond market.
See also the great series on The Sack of Imperial Bank.