Kenya’s smallest bank Dubai Bank was placed into receivership about two weeks ago. It took control and suspended all operations of the bank except to ask borrowers to continue servicing their loans.
A few days after taking charge, the Kenya Deposit Insurance Corporation (KDIC) as receiver revised its role and announced that Dubai bank would be liquidated, with each depositor paid a statutory maximum of Kshs 100,000 (~$1,000) once they file a claim that’s proven, and any larger deposit customers would share in the proceeds of the liquidation equitably.
In the past, banks that have been put into receivership rarely ever come back. From Euro Bank, Daima Bank, and even a (strong) Charterhouse Bank never reopened their doors after receivership. This is because banking relies on trust and confidence, and if the public have no faith in an institution, it’s difficult for it to operate, attracting deposits from customers, and entering into settlement transactions with other banks.