CBK extends Imperial Bank receivership to April

Imperial Bank will remain under receivership until April 2017. This is after the Central Bank of Kenya extended the receivership period of the bank under the Kenya Deposit Insurance Corporation (KDIC) by a further six months. KDIC put in a request for extension to the banking regulator which it deemed necessary to protect customers and depositors. “KDIC will maintain the management, control and conduct affairs and business of the institution, exercise all the powers of an appropriate resolution strategy as soon as is practicable,” CBK said in a statement. Imperial Bank was placed under receivership on October 13 2015, for a period of 12 months after the discovery of an elaborate fraud scheme that led to the loss of an estimated Sh38 billion. Former Managing Director Abdulamek Janmohammed is seen as the architect of the grand fraud scheme, but the central bank has held that directors and shareholders failed in their fiduciary responsibility to protect customers. This opened a battle front between shareholders and the regulator over the best way to revive the bank. Shareholders had in October 2015 presented a recovery plan which included the injection of Sh20 billion and bringing on board a strategic investor. While initial talks appeared cordial between the two parties, things soon went south with a barrage of court cases with both parties throwing counter accusations. The CBK was expected to present a recovery plan at the end of June, but chose to press on to link shareholders and directors to the fraud. On Friday, CBK and KDIC moved to court seeking to recover Sh45 billion from directors and shareholders as well as freezing known assets of 44 companies linked to them. KDIC is also attempting to have the London Companies House halt the dissolution of Mr Janmohammed’s main investment vehicle Janco Investments until the case in Kenya is determined. Since being placed under receivership, 89 percent of the depositors who had under Sh1 million in the bank have been repaid. Large depositors have however had to wait longer with no clear plans on how to access their funds. The large depositors on Tuesday moved to court seeking to be enjoined as interested party in a suit filed by the central bank and KDIC. The customers argue that they are the largest stakeholders and suffering the most due to alleged illegalities that took place at the said Bank. “The depositors and their families are already suffering due to illegalities at the said bank,” the depositors said in the petition. FTI Consulting has been conducting the forensic audit on the bank, with the central bank building a case for the prosecution of all those involved in the fraud. The firm has been paid a reported Sh1.5 billion for the consultancy services. CBK said there were 700 accounts-of-interest had isolated for scrutiny with over 22,520 high-priority transactions needing closer investigation. The Bank of Uganda, which had placed Imperial Bank (Uganda) under statutory management in October, sold the subsidiary to Exim Bank of Tanzania with CBK receiving Sh374 million from the sale.

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