It is now official that Imperial Bank Ltd (in receivership) (IBLR) will never be saved after the Central Bank of Kenya (CBK) yesterday accepted a recommendation by Kenya Deposit Insurance Corporation (KDIC) to have it wound up. On December 7th KDIC issued a report to the regulator advising that given the condition of the bank currently, liquidation is the best option for all the interested parties.
“The report indicates that considering the weak state of IBLR’s financial position, liquidation is the only feasible option,” KDIC said in an audit report submitted to CBK.
Central Bank in response agreed with the recommendation and gave KDIC the mandate to be the liquidator of Imperial Bank.
“CBK has assessed the recommendation of KDIC, the auditor’s report, other pertinent information and considered that liquidation will facilitate the orderly resolution of IBLR in accordance with the laws of Kenya,” said the banking secor regulator said in a statement posted on Twitter.
It said that this move will protect the interests of depositors, creditors and wider public interest. “Subsequently on December 8th, 2021 CBK appointed KDIC as the liquidator of IBLR in accordance with the law,” said CBK.
Small banks
The fall of Imperial Bank shook the entire banking industry and reduced the trust Kenyans had in the banking industry. The failure saw small banks lose deposits and customers moved money to larger banks. Most depositors lost their and many have never recovered their savings till today a condition that forced families and small businesses in dire streets.
In October 2015, the CBK appointed KDIC as the receiver manager for Imperial Bank after the bank ran into liquidity problems following a allegations of fraud in the bank.
KCB Bank in 2020 acquired some assets from the bank worth Sh3.2 billion and liabilities wrth a similar value.
From last year, the bank’s depositorss were to be paid 37.3 percent of their monies which adds upto Sh3.2 billion in a period of four years.So far 45,700 depositors out of 50,000 had accepted tier funds.
A slew of bank failures have erupted in the last six years shaking the economy and making depositors uneasy.
National Bank, Chase Bank, Imperial Bank are some of the banks that have fallen in the arms of larger banks after they fainted from fraud and mismanagement by their top management.
Banking system
The banking system is central to the stability of the economy and the Central Bank has since strengthened its oversight of the sector by hiring more bank supervision staff to avoid another collapse of the sector.
As key players in the banking sector, commercial banks and mortgage finance companies are subject to regulatory requirements governing their prudential position and market conduct in order to safeguard the overall soundness and stability of the financial system.
Under risk-based Supervision approach, CBK assesses the risk profile of each institution and ascertains the effectiveness of the systems and procedures to identify, measure, monitor and control risks