Category Archives: receiverships

Imperial Bank EOI

Today the Central Bank of Kenya (CBK) has invited investors (PDF) in an expression of interest (EOI) offer to buy into Imperial Bank, in a move that echoes another ongoing one at Chase Bank.

Imperial, Kenya’s 18th largest bank, was shut in October 2015 following revelations that only emerged after the sudden death the sudden death of Imperial’s group managing director (GMD), Abdulamek Janmohamed, in September 2015.  The bank had assets of Kshs 56 billion and officially had about Kshs 47 billion of depositor funds as at December 2014.

Since the closure, thousands of small depositors have been paid off the but many wealthy depositors  including the elderly, Italians and Asians families and business people still have tens of millions of shillings in deposits there – funds that they had placed for the high returns offered at the previously solid (apparently), fast-growing, business-friendly, and award-winning bank.

It appeared that the bank was headed for liquidation, but for a sudden change of plan and decision to salvage Imperial Bank three months ago. A new timetable was posted and the CBK Governor met depositors of the bank to reassure them of the new process, and they have been keeping track since.

 

The deadline for the EOI is September 29, three weeks away, after which short-listed investors will be invited to see confidential data on the bank. This is despite a long forensic audit and data mining process that was started after the GMD died, some results of which have been cited in court documents and media reports – and which paint a shocking picture about the tenure of Janmohamed and oversight by regulators at the CBK.

Proposals from the short-listed investors are expected in January 2018 for further discussions with a single preferred bidder in February along with other consultations with the shareholders, depositors, and creditors of Imperial Bank.

KPMG has been appointed as a transaction advisor for the Imperial Bank EOI as they also are in the Chase Bank one.

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.”

Chase Bank EOI 

Yesterday the Central Bank of Kenya (CBK) invited new investors to express interest in buying into Chase Bank as they also extended the management period of the bank by another six months. When the CBK governor met depositors last November, he indicated that he hoped that the deal would be concluded by the first anniversary of the closing of Chase Bank (April 7), but that has now been pushed back. Last week, the Governor also said that nine banks were interested in opening shop in Kenya.
  • Following the receipt and evaluation of EOIs, a shortlist of qualifying investors (“Shortlisted Investors”) will be granted access to a haseomprehensive confidential data room to develop a formal proposal to acquire Chase Bank (Kenya) Limited. The Shortlisted Investors will be determined in a fair process using appropriate and objective criteria based on, inter alia, regulatory imperatives and prudential guidelines which will ensure a speedy and optimal recovery for depositors, creditors and other stakeholders of Chase Bank (Kenya) Limited, whilst also mindful of seeking to preserve and develop a sound and innovative banking system in Kenya.
  •  The deadline for applications is April 21, and CBK has appointed KPMG as its advisors in this process. EOIs should include the following key areas: Interest in banking in Kenya, ownership details, management skills, adequate capital, financial resources, liquidity availability and the proposed transaction structure. 
  •  No information beyond what is already available in the public domain will be made available to interested parties and there will be no question and answer process at this stage.
  • Following the receipt of EOIs, shortlisted Investors will also be granted access to a “Data Room ” to develop their investor proposals (from May 3)

May 2 update (PDF) from the Central Bank of Kenya:  12 replies to the EOI were received. The respondents comprised of three Kenyan banks, four foreign banks, and five other financial institutions and consortia. The shortlisted ones will now be given access to confidential data and are to return their proposals by June 9.