Category Archives: Imperial Bank

Chase and Imperial Banks receivership updates

The last week of June was quite eventful for Chase and Imperial – two banks in receivership in Kenya.

First, former Chase Bank Chairman Zafrullah Khan was hauled before a court. He was charged with committing a Kshs 1.7 billion fraud at the bank and was then freed on bond after two nights in jail so he could travel to the US for medical treatment.

Mr Khan had appeared before Senior Principal Magistrate Martha Mutuku where he was charged with conspiring to defraud Chase Bank of nearly Sh1.7 billion besides three counts of stealing…
The court heard that Mr Khan had committed the offence of conspiring to defraud Chase Bank Sh1,683,000,000 by falsely pretending that the money had been disbursed to accounts of Carmelia Investments Limited, Cleopatra Holdings, Golden Azure Limited and Colnbrook Holdings as genuine loan facilities.

There were reports that seven other officials of the bank were being sought, but so far only Khan was charged.

On the same day that Khan was in court, Imperial Bank depositors had a meeting with the Governor of the Central Bank. It was quite a long session, after which they surprisingly endorsed support for the new turnaround plan at Imperial that was revealed last week. The despises of Chase have a had a long receivership period, and many of their large depositors still have not got the bulk of their savings and funds from the bank in the 21 months since the bank closed.

Receiver to salvage Imperial Bank

Today the Receiver Manager of Imperial Bank, the Kenya Deposit Insurance Corporation and the Central Bank of Kenya issued a notice of, and a timeline for, the recovery of Imperial Bank.

This is a suprising about-turn from the perception for much of period since Imperial Bank was suddenly closed in October 2015, in which there appears to have been a leaning by the receiver-manager that Imperial was beyond recovery and that it should be liquidated. Today’s notice comes exactly a year after NIC Bank was appointed to liquidate Imperial bank assets and pay off Imperial’s depositors.


Now, the envisioned recovery process is similar to one being used for Chase Bank which is open, but still in receivership. Expressions of interest are invited from strategic investors. They will be evaluated and the short-listed ones will be given further confidential data to enable them to do due diligence and come up with formal offers that they will present to the to the receiver-manager to decide on. The process will take about a year.

This is a nice sign, but is it one that should have happened earlier? In the same period the fate of other troubled banks in the region has been concluded – in Uganda (Crane and Imperial) and in Rwanda (Crane, which was bought by Kenya’s CBA last week from DFCU of Uganda.

Kenya Bank Receivership Updates: June 2017

Chase Bank: The Business Daily has unveiled the results of the bidding for Chase Bank in an ongoing receivership exit process that has been organized by the Central Bank of Kenya (CBK) .. “France’s third-largest bank by assets, Societe Generale, and Mauritius-based SBM Holdings are the frontrunners to acquire troubled Chase Bank and its subsidiary, Rafiki Microfinance.. The two have emerged top of the list of investors, including KCB Group, I&M Bank, Stanbic Bank and South Africa’s First Rand, who had expressed interest in taking over the Kenyan lender.”

Dubai Bank: The bank is in liquidation and the Kenya Deposit Insurance Corporation is calling on all depositors and creditors of the bank to show up and file their claims. During the court process, before liquidation, few depositors showed up after bad debts stalled the closed bank.

Imperial Bank: A court has just granted a 90-day extension of the receivership. It is “without prejudice” which means that the extension does not imply an endorsement of any the ongoing discussions between the shareholders of the bank, the CBK, and the KDIC. The statement ends with “a tentative timeline will be issued in the coming days.”

Relief for Imperial Bank Depositors – Part III

This week, depositors at the closed Imperial Bank got some welcome news with the announcement that a third payment was going to be paid to them.

This comes after a first payment last December of up to Kshs 1 million per depositor that was paid through KCB and Diamond Trust banks and another one earlier this year of up to Kshs 1.5 million that was paid out by NIC bank.

This third payment is unique in that it targets the remains depositors many of who are believed to be large depositors.  After the first payment, the CBK had expressed concern that some  depositors had not bothered to claim the funds offered. But assuming that someone has funds of ~Kshs 50 million to Kshs 100 million at the bank, they were unlikely to be elated to received 1 million in the first or second rounds.

This time depositors can access up to 10% of the deposits, so the people above would get Kshs 5 or 10 million – still small, but much better- and depositors have a month to file claims at any NIC bank branches to receive the payments  (deadline 31 Jan 2017).

The news also comes after a few days after newspaper stories that revealed the names and evidence of correspondence of CBK officials  who may have benefited inappropriately from the largesse of the management of the bank that they were supposed to have supervises.

$1= Kshs 102

 

Biggest Banking Stories of 2016

Some are carry-overs from 2015, but still having an impact on the banking sector in 2016 include:

1. The shutdown of Chase Bank in April 2016 came after a 24-hour period that started with a second set of 2014 financial accounts published in unclear circumstances in a newspaper, with different figures. Whether this was due to a reclassification of Shariah loans or (insider) director lending was never explained, but it accelerated an ongoing run of withdrawals and the Central Bank had to close the bank the next day. While it reopened a few weeks later with funding from the central bank (channeled through KCB), and depositors have been able to access some of their funds, the bank is not back to its full standing (it’s till not lending in full, and there’s a moratorium on depositors interest) and  new investors are being sought to enable the bank to stand on its own from April 2017.

2 Njomo Bill: In a rare bi-partisan move, usually reserved for their own salary raises, members of parliament rallied around to take on an even less popular target – that of super profit making, high-interest rate, banks with the Njomo bill. This was the latest attempt to rein in interest rates and the president surprisingly signed the bill, passing on a hot potato which was expected to lead to a slowdown in lending and make banks less attractive to investors.

3. Governor Patrick Njoroge at the Central Bank. Widely admired by the public for his no-nonsense enforcement & understanding of rules, supervision, austerity, and honestly to clean up the banking sector, but vilified in some circles for his unreasonable decision-making that has seen three banks close under his watch.

4. Last year Imperial Bank closure was a shock, and in 2016 the extent of the shell is still becoming clear through numerous court documents pitting the receivers, regulators, shareholders, some customers and even the family of the later managing director who engineered the fraud. But all that pained depositors want to know is, where is the money, how much money is there, and when will they get paid?

5. Lax government banking. From not following up whistleblowers on Family, Chase and Imperial, to a reluctance to act on South Sudan leaders. From double payments to government contractors, to county and national governments having dozens of banks accounts for inexplicable reasons. From a parastatal moving to a single signatory and withdrawing all its’ funds to pay a fictitious contract, and the funny banking of NYS money by Josephine Kabura at Family Bank. The anti-fraud / anti-money laundering/ anti-terror rules are  not being observed.