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CBK to put in motion sale of Imperial Bank

Saturday June 24 2017
Imperial Bank Photo

Imperial Bank's branch in Likoni, Mombasa on October 14, 2015. PHOTO | KEVIN ODIT | NATION MEDIA GROUP

By Allan Olingo

Kenya’s Central Bank expects to finalise the sale of Imperial Bank by May next year, after it unveiled its tentative timelines for the resolution of its receivership status.

In a statement, CBK said it hopes to advertise for the expression of interest calls (EOI) from investors, including the embattled bank’s current shareholders, in the next three weeks. The regulator hopes to analyse and shortlist the interested buyers by the end of August.

“As indicated, after initial preparations, the formal process will commence with an invitation for Expressions of Interest (EOI) from potential strategic investors. The EOIs will be evaluated and a shortlist of qualifying investors determined in a fair process using appropriate and objective criteria based on, inter alia, regulatory imperatives and prudential guidelines, which will ensure the speedy recovery for depositors, creditors and other stakeholders of the bank, while also mindful of seeking to preserve and develop a sound and innovative banking system in Kenya,” CBK said.

The shortlisted investors will have a chance to review the bank’s books, as CBK plans to grant them access to a comprehensive confidential “Data Room” of financial, legal and business performance information to develop their formal offer to take an interest in the bank.

“To ensure that the process is fully credible from the start, CBK and the Kenya Deposit Insurance Corporation (KDIC) intend to seek an extension of the receivership of IBLP for up to 12 months,” CBK said.

In October 2015, the regulator placed the bank under receivership after it emerged that it was operating two sets of books, with a potential fraud of $449 million that placed depositor’s funds at risk.

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CBK, KDIC case

In September last year, CBK and KDIC filed a case against all the directors of Imperial Bank Ltd for $449 million, which was the amount lost or defrauded while they were directors of the collapsed lender.

A claim was also made against the shareholders for irregularly paying themselves $27 million as dividends when the bank wasn’t making any profit and a further $20 million claimed from the directors for recklessly lending to firms.

The banking regulator has also cancelled the licence granted to the Reserve Bank of India (RBI) to operate a representative office in Kenya after the latter’s decision taken to close its foreign representative offices including the one in Kenya. This came as it granted a licence to Mayfair Bank Ltd, which will principally target the corporate market segment.

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