The Central Bank of Kenya (CBK) on Tuesday placed Imperial Bank under receivership for a year for what it termed as “unsafe banking conditions” to protect its depositors, creditors and members of the public.
CBK Governor Patrick Njoroge said in a statement issued in Nairobi that it has appointed the Kenya Deposit Insurance Corporation (KDIC) to assume the management, control and conduct of the affairs and business of the institution.
Njoroge said KDIC will exercise all the powers of the institution to the exclusion of its board of directors and advise CBK of an appropriate resolution strategy as soon as is practicable and not later than twelve months from date of appointment.
“CBK and the board of directors of Imperial Bank Limited are working closely on a feasible resolution mechanism for Imperial Bank Limited (In Receivership),” Njoroge said in a statement issued in Nairobi.
“The appointment of KDIC to take control of the management of the bank is intended to provide a platform for KDIC to execute its statutory mandate with the support of the board of directors of Imperial Bank Limited towards restoring the safety and soundness of the bank,” he added.
The lender which has also a branch in Uganda holds deposits worth over 480 million U.S. dollars from individual investors and major Corporation in the private and public sectors.
The Imperial Bank which is associated with the wealthy family from Asian country recently raised 19.4 million dollars debt through a corporate bond that was marginally oversubscribed with the cash to be used for regional expansion.
Kenya’s financial markets regulator, the Capital Markets Authority (CMA), also announced that it had suspended the lender’s bond issue from listing and trading on the bourse, saying the move was made to protect the interest of the public and investors.
CMA said the board of directors of Imperial Bank Limited brought to the attention of the CBK inappropriate banking practices that warranted immediate remedial action in order to safeguard the interest of both depositors and creditors.
“CMA will be working closely with the Board of Imperial Bank and KDIC to ensure all material information is made available to investors to ensure the maintenance of the transparency and orderliness of the capital markets,” CMA said in the statement.
“The Bond will in the interim remain unlisted at the Nairobi Securities Exchange until further notice,” it said.
The Imperial Bank, founded in 1992 and listed as the 19th largest lender in Kenya by CBK, becomes the second bank to be put under receivership since the new governor came into office hardly four months ago.
In August this year, the apex bank placed Dubai Bank under receivership after the lender failed to repay money borrowed from other financial institutions to keep it afloat. Enditem